Monthly Business Review, Volume: 04, Issue: 08, October-November 2013

SOUTH ASIA Performance & Competitiveness

NAME OF SECTION

Naonal News Central Bank Regulaons 06 Banking Industry 08 Banking Industry: New Agreements 10 Banking Industry: New Appointments 11 Banking Industry: New Products & CSR 12 Development 13 Business & Economy 14 Bangladesh Economy 16

MTB News & Events 18

Internaonal News 20

SOUTH ASIA Performance & Compeveness Energy Outlook Bangladesh’s Perspecve 23

Banking Industry Branch Expansion 24 ARTICLE OF THE MONTH

SOUTH ASIA PERFORMANCE & COMPETITIVENESS

Over the past decade, Asia has rapidly grown in importance to the global economy. Its share of global GDP, measured in purchasing- power parity terms, increased from 26.8% in 2001 to 33.8% in 2010. By 2016, the Economist Intelligence Unit (EIU) expects this proporti on to rise to 38.9%. As the greatest hope for growth in the global economy for the past two years, the emerging markets have become the darlings of the fi nancial press and a favorite talking point of C-suite executi ves worldwide. Once att racti ve only for their natural resources or as a source of cheap labor and low-cost manufacturing, emerging markets are now seen as promising markets in their own right. Rapid populati on growth, sustained economic development and a growing middle class are making many companies look at emerging markets in a whole new way.

On the corporate side, Asian companies have demonstrated entrepreneurial vision with bold strategies for growing outside domesti c markets. Asia now accounts for close to 10 percent of the MSCI Global Index – a doubling in fi ve years. It is expected to reach 20 percent by 2020. There are 181 Asian companies currently in the Fortune 500 list and this region now accounts for over 40 percent of global trade, doubling over the last decade. Asia’s global share of corporate revenues has also doubled from 12 to 25 percent in the last 10 years. One of the defi ning trends of this generati on is globalizati on and this had led to the rise of a new breed of aspirati onal corporate ti tans across Asia – the so called emerging champions. ANALYZING ASIA’S HISTORICAL CONTRIBUTION TO GLOBAL ECONOMY ASIA has become a key part of the global economy, boasti ng three of the ten largest economies (China, Japan, and India) and accounti ng for more than 35 percent of world GDP. Asia’s share of world GDP is rising, thanks to its economic dynamism. Indeed, the region’s economy, having fully recovered from the 1997–98 fi nancial crisis, is now the fastest growing in the world, contributi ng close to 50 percent of world growth.

2 MTBiz ARTICLE OF THE MONTH

Asia’s vitality largely refl ects its successful integrati on into the including its low public debt-to-GDP rati o (22.9 percent) and high world economy. Apart from a brief dip aft er the collapse of the gross savings rate, which is around 50 percent. 2001 informati on technology boom, its share of world exports India lost ground on this year’s index, falling from 59th to 60th has increased steadily and now stands at 27 percent. Intraregional place, and is now below all other BRICS nati ons with the excepti on trade is also growing as countries positi on themselves at diff erent of Russia, which is ranked 64th. Among the largest concerns stages of a regional supply chain. The rise in exports, coupled with for India are its underdeveloped energy and transportati on generally sluggish domesti c demand, has translated into sizable infrastructure, as well as corrupt business practi ces and bribery. current account surpluses. But if China is excluded, Asia’s surplus is now decreasing under the weight of growing oil import bills and, The outlook for competi ti veness among ASEAN nati ons conti nues in some cases, a domesti c demand recovery. In contrast, China’s to strengthen, with Thailand, Indonesia, the Philippines, and current account surplus more than doubled in 2005 on the back of Vietnam all climbing in the index’s rankings. strong export growth, reaching 7 percent of GDP. Thailand is now ranked 37th, up from 38th last year, thanks to a Asia has also integrated into global capital markets, capturing high macroeconomic rati ng and improved market effi ciency and about 40 percent of net private capital fl ows going to emerging fi nancial development. markets. Two-thirds of private equity fl owing into the region is in Indonesia saw the greatest advance of any ASEAN country this the form of direct investment. These capital infl ows, combined year, climbing 12 spots to 38th. A strong GDP growth rate of with the region’s current account surplus, have led to a large 5.2 percent plus improving infrastructure capabiliti es fueled accumulati on of foreign exchange reserves. Indonesia’s climb on the competi ti veness index. The effi ciency of Exchange rate fl exibility has increased signifi cantly in most of the its labor market and parti cipati on of women in the labor force also region (outside China, Hong Kong SAR, and Malaysia). While the saw improvements this year. strong wave of capital infl ows in 2003 led to a large accumulati on of The Philippines climbed 6 places to rank 59th on the index. reserves, more recent waves have led to less reserve accumulati on This advance was led by the current government’s fi ght against and greater exchange rate movement. corrupti on, leading to greater stability and confi dence in the In the years ahead, the region is expected to account for a rising country. While infrastructure has improved in the Philippines, share of the world economy, thanks in large part to fast-growing more progress is needed, especially in regards to air and sea ports. India and China. The challenge will be to strengthen domesti c Climbing fi ve places, Vietnam now ranks number 70 on this demand by reviving investment in emerging Asia and consumpti on year’s index. Restrained infl ati on and improving macroeconomic in China. conditi ons helped Vietnam improve its competi ti veness this In Asia, the proporti on of old people is expected to increase, as year, but progress was hampered by slow incorporati on of new it is in other regions. This is parti cularly true in Japan, where the technologies and decreasing labor market effi ciency. overall populati on is already shrinking. Aging populati ons will Taken as a whole, Asia has seen a boost in global competi ti veness reduce potenti al GDP growth and strain fi scal positi ons, as pension and is positi oned to see conti nued growth thanks to improving and health care expenditures increase. economic conditi ons and strengthened domesti c policies. GLOBAL COMPETITIVENESS INDEX HIGHLIGHTS MAJOR TRENDS EXHIBITED BY THE EMERGING CHAMPIONS It is not out of the blue that Asia is gradually dominati ng the world economy. Asia is somewhere in the middle of a trend that was set moving almost a decade ago. However, the initi al trends have changed over ti me and wore a new uniform. Below is a list of current major trends exhibited by emerging Asia: 1. Leading emerging markets will conti nue to drive global growth Esti mates show that 70% of world growth over the next few years will come from emerging markets, with China and India accounti ng for 40% of that growth. Adjusted for variati ons in purchasing power parity, the ascent of emerging markets is even more impressive: the Internati onal Monetary Fund (IMF) forecasts that the total GDP of emerging Singapore remains the most competi ti ve Asian nati on and ranks markets could overtake that of the developed economies as 2nd on the index. The effi ciency of both its labor and goods market early as 2014. helped Singapore maintain its top positi on among Asian countries. The infrastructure in Singapore was also ranked among the best The forecasts suggest that investors will conti nue to invest in the world. in emerging markets for some ti me to come. The emerging markets already att ract almost 50% of foreign direct Both Hong Kong and Taiwan ranked in the top fi ft een, with Hong investment (FDI) global infl ows and account for 25% of FDI Kong advancing two positi ons to seventh place. Hong Kong outf lows. benefi tt ed from its developed fi nancial markets, which are high on “effi ciency, trustworthiness and stability.” 2. Emerging market leaders will become a disrupti ve force in the global competi ti ve landscape Taiwan moved up one positi on to 12th place, receiving its highest rank thanks to a developed primary and higher educati on system As emerging market countries gain in stature, new companies and innovati ve business practi ces. are taking center stage. The rise of these emerging market leaders will consti tute one of the fastest-growing global trends Maintaining its positi on on the index, China ranked 29th and is the of this decade. most competi ti ve BRICS nati on. According to the study China has benefi tt ed from a stable macroeconomic outlook and decreasing These emerging market companies will conti nue to be criti cal infl ati on. Several other economic factors have helped China, competi tors in their home markets while increasingly making

MTBiz 3 ARTICLE OF THE MONTH

outbound investments into other emerging and developed economies. Working to serve customers of limited means, the emerging market leaders oft en produce innovati ve designs that reduce manufacturing costs and someti mes disrupt enti re industries. A case in point: India’s Tata Motors’ US$2,900 Nano, priced at less than half the cost of any other car on the market worldwide. A version is set to go on sale in Europe this year. Many emerging market leaders have grown up in markets with “insti tuti onal voids,” where support systems such as retail distributi on channels, reliable transportati on and telecommunicati ons systems and adequate water supply Of course, it would be a mistake to see economic growth simply don’t exist. in the emerging markets as a winner-take-all contest, with developed countries on the losing side. Billions of new middle- As a result, these companies possess a more innovati ve, class consumers in the emerging markets represent new entrepreneurial culture and have developed greater fl exibility markets for developed-world exports and companies based in to meet the demands of their local and “bott om-of-the- developed countries. pyramid” customers. 5. Global infl uence grows 3. Rising populati on and prosperity drive new consumer growth Inevitably, the BRICs’ growing economic strength is leading to and urbanizati on greater power to infl uence world economic policy. Between now and 2050, the world’s populati on is expected In October 2010, for example, emerging economies gained a to grow by 2.3 billion people, eventually reaching 9.1 billion. greater voice under a landmark agreement that gave 6% of The combined purchasing power of the global middle classes voti ng shares in the IMF to dynamic emerging countries such is esti mated to more than double by 2030 to US$56 trillion. as China. Under the agreement, China will become the IMF’s Over 80% of this demand will come from Asia. third-biggest member. Of course, it would be a mistake to see economic growth in the emerging markets as a winner-take-all contest, with developed countries on the losing side. Billions of new middle- class consumers in the emerging markets represent new markets for developed-world exports and companies based in developed countries. Emerging market corporati ons are another big new market: business-to-business sales to China and India, for example, are a key factor in Germany’s strong export economy.

Most of the world’s new middle class will live in the emerging world, and almost all will live in citi es, oft en in smaller citi es not yet built. This surge of urbanizati on will sti mulate business but put huge strains on infrastructure. Physical infrastructure, such as water supply, sanitati on and electricity systems, and soft infrastructure, such as recruitment agencies and intermediaries to deal with customer credit checks, will need to be built or upgraded to cope with the Figure:1 growing urban middle class. Addressing such concerns in Asia alone will require an esti mated US$7.5 trillion in investments by 2020. Meeti ng these needs will likely entail public-private partnerships, new approaches to equity funding and the development of capital markets. 4. Global infl uence grows Inevitably, the BRICs’ growing economic strength is leading to greater power to infl uence world economic policy. In October 2010, for example, emerging economies gained a greater voice under a landmark agreement that gave 6% of voti ng shares in the IMF to dynamic emerging countries such 6. Growing Domesti c Demand as China. Under the agreement, China will become the IMF’s Interesti ngly, in the recent years, the Asia’s domesti c demand third-biggest member. has been rising rapidly. Due to Asia’s rapid economic growth

4 MTBiz ARTICLE OF THE MONTH

over the last few years, the region is now home to a huge and capital, to producti vity-drive growth. South Korea avoided this and growing middle class. The Asian Development Bank trap, but Brazil and South Africa could not, says the report. (ADB) esti mates that between 1990 and 2008 developing Asia’s middle class populati on more than tripled from 565m Two scenarios is present before Asia- to 1.9bn. As a share of the total populati on, the middle class a. Asian Century scenario: Asia’s GDP (at market exchange rates) grew from 21% to 56% over that period increases from $17 trillion in 2010 to $174 trillion in 2050, or These new consumers have been spending on products such half of global GDP. Seven countries—China, India, Indonesia, as cars, mobile phones and computers. Between 2001 and Japan, South Korea, Thailand, and Malaysia—would lead the 2010, mobile phone penetrati on in Asia and Australasia rose Asian march to prosperity. They will account for 73 percent of from 10.9% to 70.6% while personal computer penetrati on global populati on and 90 percent of Asia’s populati on. They increased from 4.4% to 18.7% (see Figure 2). Over that same will account for 45 percent of global GDP. Asia would have a period, the stock of passenger cars per 1000 people in the per capita GDP of $40,800 in 2050, equal to the Europe’s level region grew from 34.2 units to 54.1. Asia has some of the today. Interesti ngly, Asia would have no poor countries (those fastest growing automobile markets as well as some of the with average per capita GDP of less than $1000), compared largest automobile manufacturers in the world. In 2009, China with eight today. overtook the United States as the world’s biggest car market. Importantly, all three markets conti nued to expand right b. Middle Income Trap scenario: Assumes that fast-growing through the global economic downturn in 2008-09, refl ecti ng converging economies fall into the trap in the next 5-10 the resilience of Asian private consumpti on. The EIU forecasts years, without any of the slow- or modest-growth aspiring that by 2016, there will be 84.8 cars per 1000 people, while economies improving their record. Asia’s GDP in 2050 would mobile and computer penetrati on will have reached 112% and be $65 trillion only and GDP per capita $20,600. A combinati on 32.5% respecti vely. of bad macro policies, fi nance sector exuberance with lax supervision, confl ict, climate change, natural disasters, changing demography and weak governance could lead to this scenario.

Figure 4

7. Asia : The Global Manufacturing Powerhouse Asia is emergence as a global manufacturing powerhouse. Over the past decade, Asia’s share of global manufacturing output has increased dramati cally, led by China. This has boosted demand for asian products that are used to manufacture a variety of goods. CHALLENGES FOR ASIA In the light of the current and future conditi on of Asia, growth challenges faced by Asia includes: a. Increasing inequality within countries, which could undermine social cohesion and stability. b. For some countries, the risk of getti ng caught in the “Middle Income Trap”, for a host of domesti c economic, social, and politi cal reasons. c. Intense competi ti on for fi nite natural resources, as newly affl uent Asians aspire to higher standards of living. ASIA IN 2050 d. Rising income dispariti es across countries, which could The esti mates in a new book (Asia in 2050) by the ADB shows that destabilize the region. if Asia conti nues on its recent trajectory it would double its share e. Global warming and climate change, which could threaten of global GDP to 52% by 2050 and regain its dominant economic agricultural producti on, coastal populati ons, and major urban positi on it held in the 1700s. The rise, fall and rise of Asia is areas. depicted in fi gure 1 by the U-shaped GDP (share of global GDP). Specifi cally, it is like the shape of a marginal cost curve. f. Poor governance and weak insti tuti onal capacity, faced by But, it warns that “Asia’s conti nued rise is plausible, but by no almost all countries means pre-ordained”. China, India, Viet Nam, and Indonesia CONCLUSION could fall victi m to the “middle-income trap”—as countries grow rapidly they are unable to compete with low-income, low-wage The biggest conti nent in the world has a very bright future. Even in economies in manufactured exports and advanced economies in the dimmest of light, Asia should become the largest contributor high-skill innovati ons. It basically means that countries fail to make of world GDP. But future, as always, is uncertain. What is writt en in a ti mely transiti on from resource-drive growth, with low-cost labor the fate of Asia is to be seen in the future.

MTBiz 5 NATIONAL NEWS CENTRAL BANK REGULATIONS

BB Governor : FIs rise six ti mes in last 5 years of technical allocati ve and cost effi ciency of Islamic banks Governor of Bangladesh in Bangladesh using data envelopment analysis (DEA)’, ‘an Bank Dr. Ati ur Rahman assessment of fi nancial stability in the banking sector: an empirical distributed cheques and analysis’, and ‘emergence of Islamic banking: why and how?’ certi fi cates among the For its next issues, the journal welcomes the papers with themes meritorious students underpinning the country’s overall development issues in the areas under the “Mercanti le such as macroeconomics, central banking, money and banking, Bank Abdul Jalil Educati on internati onal trade, sustainable development, environmental Scholarship-2012” as chief economics, sustainable entrepreneurship, inclusive fi nancing, guest Saturday. agriculture and SME sector etc. He menti oned that Forex reserve comes down to $16.63b aft er ACU payment expenditures in Corporate Social Responsibility (CSR) acti viti es “We’ve already remitt ed the fund to the ACU headquarters in undertaken by banks and non-banks fi nancial insti tuti ons were Tehran in line with the existi ng provisions of the nine-member increased six ti mes during the last fi ve years. In last fi ve fi scal years, union,”a senior offi cial of the Bangladesh Bank (BB) told the FE. the banks, fi nancial and non-bank fi nancial insti tuti ons spent Tk 30.05 million in conducti ng diff erent CSR acti viti es, he added. The country will be able to sett le more than fi ve months’ import bills with the existi ng forex reserve. Bangladesh is importi ng Mercanti le Bank Limited (MBL) organised the programme where diff erent consumer items, raw materials and capital machinery some 174 students from various colleges and universiti es were from the ACU member countries, parti cularly from India, the BB awarded scholarship for their outstanding results. Each of students offi cial explained. received Tk 750 monthly basis for excellent results in JSC level, Tk 1000 monthly basis for brilliant results in SSC level and Tk 1500 The ACU is an arrangement involving Bangladesh, Bhutan, India, monthly basis in HSC level. MBL Managing Director M Ehsanul Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives, Haque said total 760 meritorious students will be awarded the through which intra-regional transacti ons among the parti cipati ng scholarship from across the country. central banks are sett led on a multi lateral basis. Mindset of lenders is the biggest challenge for green BB asks banks to submit statements of asset-liability, profi t- banking: Ati ur loss quarterly Lenders have to change Bangladesh Bank on Wednesday asked the scheduled banks to their mindset for the sake submit their statements of asset-liability and profi t-loss on a of the country’s ‘green quarterly basis. growth’, Bangladesh The BB issued a circular to managing directors and chief executi ve Bank Governor Ati ur offi cers of all banks asking them to submit the statements to the Rahman said yesterday. central bank’s Department of Off -Site Supervision within the last “Mindset and atti tude is working day of the following month aft er the end of each quarter. the biggest challenge for The BB circular said that the banks’ statements of asset-liability structured green banking practi ces,” Rahman told a conference and profi t-loss would help the BB’s scruti nizing system. The banks on the Internati onal Sustainable Banking Forum 2013 at Radisson are instructed to submit the statements in a specifi c format on Blu Water Garden Hotel in the city. The central bank and the a quarterly basis as per the secti on 38 of the Bank Company Act Internati onal Finance Corporati on co-organised the programme. 1991, the circular said. Serge Devieux, director for South Asia of IFC; Kyle Kelhofer, country BB suspects rise in money laundering thru import LCs manager of IFC’s offi ce for Bangladesh, Bhutan and Nepal; chief executi ves of diff erent commercial banks and fi nancial insti tuti ons Bangladesh Bank is going to make mandatory for the scheduled and offi cials of central banks and regulatory commission of banks to maintain standard reference prices against their opening diff erent countries att ended the programme. of lett ers of credit in a bid to check money laundering through price forgery in the form of over-invoicing and under-invoicing, BB launches journal said central bank offi cials. Besides, the BB will also ask the Bangladesh Bank (BB) scheduled banks to ensure whether the exporters were returning Governor Dr Ati ur Rahman their export earnings in the country in due ti me, he said. Tuesday urged the scholars The offi cial said, ‘The majority number of banks are now opening to disseminate their lett ers of credit for capital machinery as per products’ prices of the knowledge and thoughts to importers. The banks do not verify the original prices of the capital help the public and private machinery. The offi cials of the scheduled banks usually express authoriti es cope with the their ignoring atti tude about the original prices of the capital changing dynamism of the machinery when the BB inspecti on team visited the AD branches world fi nancial architecture. of the banks, he said. Mr Rahman was speaking as the chief guest at a ceremony Under the circumstances, the central bank will ask the banks, arranged to unfold cover of a half-yearly journal “Thoughts on before opening of the LCs, to verify the machinery prices from Banking and Finance” (July-December, 2012), published by the other banks or producti on companies concerned, he said. Bangladesh Bank Training Academy (BBTA). The banks concerned will receive help from the country’s high The journal assembled six research arti cles ti tled: ‘a sovereign commission offi ces located in the importer’s country, he said. The bond issue for Bangladesh: determinants, risks and strategies’, central bank will also give directi ons the banks to scruti nise the ‘esti mati ng growth-infl ati on trade off threshold in Bangladesh’, export earnings of the exporters as it (BB) has recently received a ‘dynamic linkages between macroeconomic variables and stock number allegati ons that some businesspeople were not returning prices in Bangladesh: an empirical analysis’, measurement their earning from foreign countries in due ti me, he said.

6 MTBiz NATIONAL NEWS CENTRAL BANK REGULATIONS

Scheduled banks asked to restructure boards BB promotes CSR to avoid risks Bangladesh Bank on Sunday restructured the boards of directors The Bangladesh Bank Governor Dr Ati ur Rahman has said the of the scheduled banks and their responsibiliti es in accordance regulator has been promoti ng socially responsible banking in with the Bank Companies (Amendment) Act 2013. Bangladesh to avoid fi nancial crisis.For doing so, the central The BB circular said every scheduled bank would have to create bank took lessons from the most recent global fi nancial crisis, three separate committ ees — audit committ ee, executi ve what he said, “was in part caused by excessive risk taking and a committ ee and risk management committ ee — comprising the narrow focus on short-term profi t maximisati on on the part of key board members. fi nancial insti tuti ons.” The members of the risk management committ ee will be selected The governor was speaking at a discussion at World Bank from the board of directors of the respecti ve banks. The board heaqquarters in Washington on Friday.The event was organised on will select fi ve members for the risk management committ ee for the sidelines of 2013 annual meeti ng of the World Bank Group and three years. The risk management committ ee will detect the credit the Internati onal Monetary Fund. risk, foreign exchange transacti on-related risk, internal control and He said BB has already formulated a CSR guideline that indicates compliance-related risk. the type of acti viti es that banks can classify as CSR and which also The BB circular set fresh terms of references for the executi ve excludes elite club contributi ons.The annual CSR report launched committ ee of the scheduled banks. It said the members of the in by all banks created healthy competi ti on in the banking sector, executi ve committ ee would be selected from the boards of the he added. respecti ve banks. The BB circular said that fi ve members of a scheduled bank’s board would be selected to comprise the audit BB expects interest rate spread to fall further committ ee. As per Bank Companies (Amendment) Act 2013, a Declining trend of the interest rate spread in the country’s scheduled bank will have to appoint three independent directors banking sector conti nued unti l August following the central bank’s if it has a board comprising 20 members. The central bank said conti nuing persuasion, offi cials said Tuesday. that the scheduled banks would appoint a consultant with at least The weighted average spread between lending and deposit rates 15-year experiences in the banking or administrati ve fi eld. off ered by the commercial banks came down to 5.01 percent in BB move to ensure good governance in banks Guidelines for August 2013 from 5.02 percent in the previous month. The central chairmen, CEOs, boards of directors issued banker also said the BB is advising the banks to reduce the spread The central bank has taken a move to ensure good governance through decreasing the interest rates on lending, parti cularly for in the country’s banking sector through updati ng responsibiliti es producti ve sectors that would facilitate the country’s business and formati on of banks’ boards of directors, offi cials said. The acti viti es. Bangladesh Bank (BB) issued three circulars in this connecti on and The spread being maintained by at least 24 commercial banks asked chairmen and chief executi ve offi cers (CEOs) of all the banks out of 53 sti ll ranges between more than 5.0 and 10.12, while to comply with the existi ng rules and regulati ons in line with the the average spread of the four government-owned commercial Bank Company Act (Amended) 2013. banks (SoCBs) is 3.34 percent, private commercial banks (PCBs) The CEO will ensure compliance of the Bank Company Act, 1991 5.26 percent, foreign commercial banks (FCBs) 8.67 percent and and/or other relevant laws and regulati ons in discharge of routi ne specialised banks (SBs) 2.70 percent. functi ons of the bank.”The CEO shall report to the Bangladesh All branches of bank, NBFI come under BB watch Integrated Bank of issues violati ve of the Bank Company Act, 1991 or of other laws/regulati ons and, if required, may apprise the board post supervision soft ware introduced facto,” the BB said. Besides, the BB issued a unifi ed policy for the Bangladesh Bank on Tuesday introduced an integrated supervision banks in appointi ng their advisors and consultants contractually. soft ware to bring all branches of the country’s scheduled banks BB asks banks not to open LCs without BIN as importer and non-bank fi nancial insti tuti ons under a web-based monitoring system in a bid to check fraudulent act. The Bangladesh Bank asked the scheduled banks not to open any lett er of credit for the business organisati ons which did not take BB governor Ati ur Rahman inaugurated the soft ware at the central business identi fi cati on number (BIN) as importers. The BB issued bank headquarters in the capital while managing directors and a circular lett er to head offi ces and principal offi ces of all banks executi ve offi cers of some scheduled banks and senior offi cials of which are operati ng foreign exchange-related business saying that the central bank att ended the programme. some business organisati ons were now opening LCs, generally At the programme the BB governor said the central bank would known as import orders, without taking BIN as importers. impose fi nancial penalty against the banks and the NBFIs which The BB circular said that the banks would have to follow the NBR would fail to provide data in due ti me to the central bank.Before directi ons about including imported products’ descripti on to introducing the ISS, the central bank collected data from head remove the complexiti es when the imported products would be offi ces and authorised dealer branches of the scheduled banks released. through the web-based network. BB off ers Tk 100cr fund to ensure fair prices for growers A BB offi cial told New Age on Tuesday that the central bank would The central bank yesterday announced a Tk 100 crore refi nancing collect the informati on of key risk indicators of the branches of scheme to ensure fair prices for jute farmers who are walking the banks and the NBFIs through the ISS.The soft ware will also a ti ghtrope this season. Banks will receive funds to extend low- integrate other supervision-related soft ware introduced by the cost loans to jute traders so that the growers get fair prices, central bank, he said. Bangladesh Bank Deputy Governor SK Sur Chowdhury said at a Under the circumstances, the BB’s monitoring and supervision press conference at the BB headquarters. on the banks and the NBFIs will be strengthened than that of the Chowdhury said the jute farmers will indirectly be benefi tt ed from previous period, the BB governor said.Not only domesti c branches this. Private jute mill owners and jute traders will receive loans but also foreign branches of the scheduled banks and non-bank from the fund at 8-9 percent, while the present interest rate in the fi nancial insti tuti ons will be included in the web-based supervision market is 15-16 percent. system of the central bank, another BB offi cial said.

MTBiz 7 NATIONAL NEWS BANKING INDUSTRY

IDLC to arrange Tk 502.62m term loan for Panigram Resort percent on their term deposit products instead of 12.50 percent. Panigram Resort Limited has recently appointed IDLC Finance The decision came from a meeti ng of managing directors and chief Limited as the lead arranger and agent for raising Tk 502.62 executi ve offi cers of four state-owned commercial banks and four million term loan and working capital facility for setti ng up a state-run specialised development banks held at the Agrani Bank socially and environmentally responsible bouti que eco resort and headquarters in the capital. spa in Jessore. The resort is located 70 km from the Sundarbans, The eight state-run banks are: Sonali Bank, Janata Bank, Agrani a UNESCO World Heritage Site. Panigram having 34 banglows will Bank, Rupali Bank, Bangladesh Krishi Bank, RajshahiKrishiUnnayan be designed to showcase Bangladeshi culture and will have a large Bank, BASIC Bank and Bangladesh Development Bank. number of acti viti es that give guests a taste of Bangladeshi village Associati on of Bankers, Bangladesh, anorganisati on of scheduled life, says a press release banks’ managing directors and chief executi ve offi cers, in 2012 MasterCard opens offi ce made a decision not to impose interest rate at the highest 12.50 Recently MasterCard announced the offi cial opening of a local percent on deposit and 15.50 percent on lending. representati ve offi ce in Dhaka,Bangladesh.The fi rst in the industry The ABB made the decision when Bangladesh Bank withdrew the to inaugurate an offi ce in Bangladesh, MasterCard marked the cap of the interest rate on lending and deposit. A BB offi cial said occasion with an opening ceremony, which was graced by Dr. that majority number of the scheduled banks were now enjoying Ati urRahman, Governor of Bangladesh Bank as Chief Guest and available fund as the loan disbursement had declined recently Nurul Amin, Chairman of Associati on of Bankers, Bangladesh amid politi cal unrest. (ABB) as special guest. Bad loans jump by 50pc in 6 months in Ctg banks MasterCard’s decision to open an offi ce in Bangladesh is based on Bad loans with the ship breaking, commodity and steel re-rolling the growth potenti al of the market driven by the growing middle sectors have put tremendous pressure on executi ves in the public class and e-commerce. Situated in the heart of Gulshan, Dhaka, and private commercial banks as cases piled up for years remain the Bangladesh offi ce will be headed by Syed Mohammad Kamal, unsett led with the concerned courts facing acute shortage of country manager, MasterCard Bangladesh. judges. Beyond bringing its global experti se in technology and payments On the other hand, the loan defaulters are increasingly taking processing to its local partners , one of MasterCard’s key prioriti es advantage of lapses in the concerned rules of loan recovery in Bangladesh is fi nancial inclusion - the delivery of fi nancial through fi ling writ peti ti ons seeking stay order or clemency or the services at aff ordable costs to the underbanked segment of society. dilly-dally tacti cs.The bad loan of banks in the Chitt agong region While 55% of the adult populati on in Bangladesh has some access was Tk 108.46 billion on June 30, 2013 against that of Tk 75.35 to fi nancial services, largely due to micro-fi nance soluti ons, only billion on December 31, 2012, while the total loan amount stands 22% is fully banked . By working with key local fi nancialinsti tuti ons at Tk 854.70 billion on June 30, 2013 against that of Tk 813.85 and NGOs, MasterCard looks forward to bringing safe and billion on December 31, 2012.Most of the loan defaulters are the convenient payment services to meet the needs of the fi nancially- local ship breaking industries, commodity importers and steel re- underserved in Bangladesh. rolling mills which have taken loans under LTR (loan against trust Sonali Bank & IBBL gets ‘Best Brand Award’ receipt). Sonali Bank Limited and Islami Bank Bangladesh Limited received Bank credit-deposit rati o declines below 72pc ‘‘Best Brand Award-2013’’ from Bangladesh Brand Forum. Milward According to the latest BB data, the overall ADR in the banking Brown, an internati onal market survey and research organisati on sector dropped to 71.65 percent as of September 26 from 73.34 selected these banks among the competi tors in the category of percent as of August 1, 2013. banking services, said a press release. Over 550 parti cipants The BB data showed that the ADR in the banking sector was from corporate houses, banks, business bodies, entrepreneurs, 76.95 percent as of January 10, 76.28 percent as of February 7, academics, agency and media houses att ended the event. 75.28 percent as of March 14, 75.26 percent as of April 25, 74.90 UCB raises $23.03m under IPFF of BB percent as of May 2, 74.01 percent as of June 13, 73.35 percent as United Commercial Bank Limited as the Lead Arranger, raised $ of July 11, 73.34 percent as of August 1 and 71.65 percent as of 23.03 million under the Investment Promoti on and Financing September 26 of this year. Facility (IPFF) of Central Bank funded by Internati onal Development As per the BB rules, the conventi onal commercial banks are not Associati on (IDA) of World Bank recently.Bangladesh Bank took allowed to invest more than 85 percent of their deposits while this praiseworthy initi ati ve and disbursed a fund of $19.91 million Islamic banks and Islamic wings of the conventi onal commercial which will be uti lized for fi nancing a 50 MW independent power banks can invest up to 90 percent of their deposits.The ADR in the generati on plant, said a press release.The said fund would be banking sector along with its credit growth will decline further in disbursed through United Commercial Bank Limited and Trust the coming months if the ongoing politi cal instability conti nues, Bank Limited, where UCBL will act as a Lead Arranger. he said. ICB Islamic Bank gets another year for payback The BB data showed that the ADR in 33 out of 47 banks (excluding ICB Islamic Bank Ltd, the off shoot of former Oriental Bank Ltd, has nine new banks) went down signifi cantly between December 31, been awarded one more year under the Bangladesh Bank’s bailout 2012 and September, 2013. package to pay back depositors’ money within the extended ATM transacti ons exceed Tk1tn period.A circular was issued to this eff ect, signed by central bank Bangladesh Bank data shows the transacti ons through the governor DrAti urRahman, on Sunday night. automated teller machines rose from Tk400bn in 2010. According to the circular, the previous ti meframe under the Out of 47 scheduled banks, 42 off er full or parti al online banking scheme was fi ve years and six months. But it has been extended by services providing faciliti es to the customers with debit and one more year to six years and six months for the payback.The BB credit cards.Debit card transacti ons rose to Tk600bn in 2012 from authoriti es have treated the bailout package as the reconsti tuti on Tk200bn in 2010 while the credit card transacti ons registered a period for the private bank. dramati c rise to Tk200bn in 2012 from zero in 2010. State banks cut interest on term deposit ATM booths of diff erent banks are now commonly visible in the The state-run eight banks on Monday made a decision that from city areas and district towns. “It’s much easier and hassle-free now on they would give rate of interest at the highest 11.50 method of banking transacti on. Under the mutual agreements

8 MTBiz NATIONAL NEWS BANKING INDUSTRY among the banks, customers of a bank can also use ATM booths of accounts and the private banks waived Tk281m against 2,370 other banks, which made the network further expanded. accounts, according to Bangladesh Bank. Bangladesh Bank has no FY13 worst year for banking sector: CPD guideline on exempti on of the interest on loan and it is decided on the bank-client relati onship. A senior executi ve of Bangladesh The growth of gross domesti c product will fall below 6 percent Bank said the banks have been asked to recover the default loans in the current fi scal year as the country has entered into politi cal that increased rapidly in the recent ti mes. business cycle in electi on year when economic acti viti es become stagnant, said Debapriya Bhatt acharya at a news conference in According to the central bank data, the state-owned specialised Dhaka while presenti ng a research ti tled ‘Bangladesh Economy in banks waived Tk40m interest against 1,256 accounts and the FY14 — three months aft er budget, three months before electi ons.’ foreign commercial banks waived Tk8.6m against 124 accounts during the months of July and August. The senior executi ve The prominent factors that determine the politi cal business cycle conti nued: “Bangladesh Bank has signed memoranda of — increased budget defi cit in electi on year, increased public understanding with diff erent state-owned banks to expedite the expenditure in pre-electi on year, increased public consumpti on loan recovery.” in electi on year and increased tax collecti on eff ort aft er electi on — are present in the Bangladesh economy, it said.‘The FY 2013 The executi ve said the banks suff er a Tk37bn shortf all of provisions, should be marked as the worst one for the banking sector. The forcing the banks to focus more on recovering default loans than government had a surreal budget for which banking sector had to making profi t. During the period 2009-2012, the banks waived a bear the brunt,’ said Debapriya. total of Tk6.81bn of interest against 217,992 loan accounts. The total classifi ed loans of the state-own banks amount to Tk233bn. The CPD research paper said the private sector credit growth was 11 percent compared to the target of 18.5 percent in the FY13 The non-performing loans to total loans and advances increased when capital machinery import fell by 8.5 percent. CPD said the to 10% in 2012 from 6.2% in 2011. Waiving interest is a sensiti ve revenue collecti on by the Nati onal Board of Revenue in the FY13 issue. Giving such privilege hampers normal loan recovery. fell short by Tk 3,644 crore and the government borrowing from Farmers to get EBL loans without collateral banking channel was Tk 3.852 crore higher than esti mated in the Eastern Bank yesterday launched a collateral free credit facility for budget. The share of classifi ed loan in the total outstanding loan rose to 11.9 percent in the FY13 compared to 7.2 percent in the farmers to buy agricultural machineries and equipment. FY12, he added. Any individual farmer can avail the quarterly instalment-based Farm loan disbursement rises by 25pc in Q1 Banks focus on term loan— EBL Projukti —ranging from Tk 10,000 to Tk 150,000 agri sector amid low demand from industrialists for maximum of two years. The Bangladesh Bank data released on Monday showed that Maximum 70 percent of machinery price will be provided as a farm loan disbursement by the scheduled banks increased to loan under the facility, which is Tk 2,861.58 crore in July-September of the FY14 from that of Tk designed only for the end users, 2,292.52 crore in the corresponding period of the FY13. the bank said in a statement yesterday. BB offi cials told New Age on Monday that the fi gure increased as the majority of the banks disbursed signifi cant amount of loans in Ati urRahman, governor of the agriculture sector due to a decreased loan demand from the Bangladesh Bank, and Ali Reza industrial sector amid politi cal unrest.The central bank gave the Ift ekhar, managing director directi ve as the credit growth in the private sector conti nuously and chief executi ve of EBL, declined since the beginning of the FY13. launched the product at a press conference in the capital. The private and foreign commercial banks together disbursed Tk 1,162.15 crore in agricultural loans in July-September, which Govt emptying banks before tenure ends Borrows Tk 9,634cr is 20.02 percent of their total annual loan disbursement target from commercial banks in 3 months of Tk5,805 crore. Besides, the banks have also taken a cauti ous The government has borrowed Tk 9,634.11 crore from the policy in giving fresh industrial loan aft er a number of scams in the commercial banks in just three months of the current fi scal year banking sector were unearthed, he said. keeping an eye on the next nati onal electi ons, said bankers on Eastern Bank’s new venture in country’s fi nancial market Wednesday. Eastern Bank Ltd (EBL) According to the latest Bangladesh Bank data, the government’s has launched Commercial net borrowing in July-September stood at around Tk 1,713.61 Paper (CP), a widely used crore as it borrowed heavily from the commercial banks and money market fi nancial repaid some of its loans it had taken from the central bank earlier. instrument across the ‘The government is borrowing heavily from the commercial banks world, of BDT 500 million as it is nearing the end of its tenure. It has also reduced borrowing for ACI Ltd for their high end subscribers.The CPs from the central bank,’ said a BB offi cial. He said as the state-run are covered by bank commercial banks were facing capital shortf all, the government guarantee. The move initi ated a new chapter in the history of the was borrowing heavily from the private commercial banks. fi nancial market of Bangladesh. BB data showed that ti ll September 26 the government borrowed To celebrate this remarkable deal, a ceremony was organised Tk 9,634.11 crore from the commercial banks and repaid the recently at The Westi n, Dhaka. SK Sur Chowdhury, Deputy central bank Tk 7,920.50 crore. The BB offi cial said that the Governor, Bangladesh Bank was present as the Chief Guest. government repaid the loans to BB aft er the central bank deposited its profi t of Tk 4,072 crore for the last fi nancial year 2012-13 to the The Deputy Governor appreciated the eff orts of EBL and ACI for government. being the pioneer to bring CP in the market. He termed CP as an important instrument for the growth and development of fi nancial BB data showed that ti ll September 5, the government had a markets. borrowing of Tk 5,998.07 crore from the commercial bank in the current fi scal year.Furthermore, the government’s outstanding Banks exempt Tk1bn interest bank borrowing, which had accumulated over the years, stood at The state-owned commercial banks waived Tk687m against 330 Tk 1,14,366.05crore as of September 26, 2014.

MTBiz 9 BANKING INDUSTRY NEW AGREEMENTS

UCB teams up with DEX Internati onal Kashem Khan, Head of Mobile Banking of DBBL and other senior United Commercial Bank Limited (UCB) signed an agreement for offi cials from both the organisati ons were present. Under this remitt ance arrangement with DEX Internati onal, UK recently. The agreement (subject to the approval of BB), all the 1024 branches agreement was signed with a view to remit the hard earned money of the BKB will provide mobile banking services. of Bangladeshi expatriates through banking channel, says a press UCBL ti es up with Airtel to reach banking to poor release. Muhammed Ali, managing director of UCB, and Asmat United Commercial Bank Limited (UCBL) signed an agreement Ullah Butt , director of DEX Internati onal, signed the agreement. with Airtel Bangladesh to bring banking services to the doorstep of Among others, M Shahidul Islam, additi onal managing director of the unbanked people of Bangladesh through the mobile fi nancial UCB, Md Sohrab Mustafa, senior executi ve vice-president and head service of UCB named UCASH on Sunday. Airtel is one of the of Internati onal Division, Syeedur Rahman, vice-president and partners of UCBL for providing the UCASH services, said a press head of Remitt ance Dept, and Abid Sikander, manager operati on release. of DEX Internati onal, UK, were present at the signing ceremony. Under the agreement, all Airtel customers registered with UCASH City Bank AmEx ti es up with MHSL, HT4U will be able to avail UCASH services which ensure transacti on City Bank American Express security. has ti ed up with Malaysia SIBL inks MoU with KMB Healthcare Services Ltd and Healthtour4u Sdn Social Islami Bank Limited (SIBL) has recently offi ciated a Bhd (HT4U) to provide its Memorandum of Understanding (MoU) with KMB Internati onal cardmembers extraordinary Money Transfer, London, UK to strengthen bank’s remitt ance benefi ts and savings on business further. The MoU was signed at Hotel Sonargaon, Osborn world-class healthcare in Street, London at an in-house ceremony. Malaysia. Being the Chief Guest of the ceremony, Major (Retd.) Dr. Md. Malaysia has been recognised as a new medical desti nati on to Rezaul Haque, Chairman of the Board of Directors of SIBL delivered Bangladeshis for its great faciliti es and aff ordable prices, said a his speech before the guests who witnessed the ceremony at Hotel press release. Sonargaon. Alhaj Sk. Mohammad Rabban Ali, Chairman, Executi ve Committ ee and Md. Anisul Hoque, Director and Ex-Chairman of Under the off er, City Bank American Express Credit Cardmembers SIBL were also present in the signing ceremony. will avail a ‘Healthcare4U Membership Card’ which gives them up to 30 percent savings at four renowned hospitals in Malaysia Md. Shafi qur Rahman, Managing Director of SIBL, Mr. Kamru - KPJ Healthcare, Sunway Medical Centre, Ramsay Sime Darby Miah, Managing Director of KMB and Ms. Shahnaz Chowdhury, Healthcare and Global Doctors Specialist Centre (Hospital). Sponsor Director of KMB signed in the agreement on behalf their respecti ve organizati ons. In additi on, Cardmembers can keep and track every medical history over the internet for any future use. The off er also includes EBL and Novoair, jointly inaugurati ng an exclusive check-in Special Healthcare Screening Packages at choice of Panel Hospitals, counter Royalty programmes with Hotels and Airlines etc. Ali Reza Ift ekhar, Managing BKB signs deal with bKash Director & CEO of EBL and Faiz Khan, Chairman of Bangladesh Krishi Bank (BKB) Novoair, jointly inaugurati ng signed an agreement with bKash, an exclusive check-in counter a joint venture between BRAC for EBL Premium Clients at Bank, Bangladesh, and Money the domesti c terminal of in Moti on LLC, USA, in Dhaka Hazrat Shahjalal Internati onal recently. Airport Saturday. Mofi zur Under the agreement, bKash will Rahman, Managing Director provide its account opening, Cash of Novoair, M Nazeem Anwar Choudhury, Head of Business, In and Cash Out services to all Consumer Banking of EBL and senior offi cials from both the Krishi Bank branches across the organisati ons were present among others on the occasion. country, said a press release. Dhaka WASA, DBBL sign e-payment deal Kamal Quadir, Chief Executi ve Dhaka WASA and DBBL signed an agreement to link up its newly Offi cer of bKash, and Manjur Ahmed, Deputy Managing Director launched website with DBBL’s 3D secured Payment Gateway of Bangladesh Krishi Bank, signed the agreement on behalf of their known as “Nexus Gateway” at a city hotel on Wednesday. respecti ve organisati ons. Architect Yeafesh Osman, State Minister for Science and Technology Alauddin A Majid, Chairman of BKB, Md Abdus Salam FCA, att ended the functi on as chief guest, said a press release. Managing Director of BKB, and Syed Mahbubur Rahman, Managing Director and CEO of BRAC Bank, att ended the signing ceremony. The agreement was signed by Engr Taqsem A Khan, Managing Director, Dhaka WASA and KS Tabrez, Managing Director of Dutch- Bangladesh Krishi Bank (BKB) and Dutch-Bangla Bank (DBBL) Bangla Bank Limited on behalf of their respecti ve organisati ons. Bangladesh Krishi Bank (BKB) The agreement was signed in a bid to cater to the needs of WASA and Dutch-Bangla Bank consumers for online bill payment through its new and robust (DBBL) signed an agreement website www.dwasa.org.bd. Wednesday at the Head Offi ce of the BKB for partnership Consumers are now paying their bills in bank’s counter by standing on Mobile Banking. The in a long queue. To facilitate the consumer to pay the bill without agreement was signed by going to the bank counter, Dhaka WASA has selected Dutch-Bangla Manjur Ahmed, DMD of BKB Bank to link up its website. and Abul Kashem Md. Shirin, With this integrati on of Dhaka WASA with the Nexus Gateway, DMD of DBBL while Alauddin consumers can use DBBL Nexus Debit Card, VISA card and A. Majid, Chairman of BKB, MasterCard (debit or credit) to pay Dhaka WASA bill through Md. Abdus Salam, MD of BKB, K.S. Tabrez, MD of DBBL, Abul internet.

10 MTBiz BANKING INDUSTRY NEW APPOINTMENTS

New MD of City Bank charge of many important branches, Zonal Sohail R. K. Hussain has taken the charge Offi ces and Head Offi ce of the 3 (three) of City Bank as its new Managing Director major Nati onalized Commercial Banks i.e. & CEO. Prior to this, he was the Additi onal Sonali, Agrani and Janata Bank. Before Managing Director & Chief Business he was promoted as Deputy Managing Offi cer of the bank. Director of Janata Bank in 2005 he served Sonali Bank and Agrani Bank as General Sohail Hussain obtained his MBA from IBA, Manager. He parti cipated in many training Dhaka University. He started his career as programs on banking interest in diff erent a Management Trainee in ANZ Grindlays training insti tuti ons at home and abroad. Bank in 1990. He was the Head of Local He is acti vely associated with many socio-cultural organizati ons Corporate Business in ANZ Grindlays, Head of Large Local Corporate Unit of Standard and traveled India, China, Malaysia, Hong Kong, Thailand, Saudi Chartered Bank and later on the Head of Corporate Banking & Arabia, Indonesia, UK, UAE & USA on professional and personal Structured Finance at Eastern Bank Limited. tours. He joined City Bank as DMD and Head of Business in 2007. He New MD of ONE Bank represents City Bank in the boards of IIDFCL, IIDFCL securiti es, M. Fakhrul Alam has been reappointed as Ventura Investment Partners Bangladesh Ltd. the Managing Director of the ONE Bank Mr Sohail Hussain brings with him a host of experience relati ons Limited for the second term. Before joining to Corporate Banking, Structured Transacti ons, Transformati on of at ONE Bank Limited, he was the Deputy Banks, Retail Banking & Cards, SME. Managing Director and Head of Corporate Banking, Treasury & Investment Banking of Mercanti le Bank’s new DMD Eastern Bank Limited. Mohammad Masoom has recently joined Mercanti le Bank as deputy managing Mr. Alam has diverse experiences in director, the bank said in a statement Banking spanning over 29 years, including yesterday. corporate, treasury and investment banking in various capaciti es in diff erent banks and other fi nancial Masoom has been serving Nati onal Bank insti tuti ons. as senior executi ve vice president and head of CRM before joining Mercanti le He started his career at Agrani Bank Limited as an offi cer in Bank. 1983, and later served diff erent organizati ons at home & abroad including IFIC Bank Limited and Bank of Credit & Commerce He achieved his master degree in public Internati onal (Overseas) Ltd. administrati on from Dhaka University and completed his MBA in fi nance and PGD(s) in development Standard Bank gets new EC chairman economics/planning and HRM. Mohammad Shamsul Alam, sponsor director of Standard Bank, A new DMD joins the growing MTB Group has recently been elected executi ve committ ee chairman of the Mr. Syed Rafi qul Haq (SRH) as MTB bank. Aft er completi on of educati on Alam started his business Deputy Managing Director and Head of career and became the proprietor of Radio Vision. He also worked Wholesale Banking Division (WBD) with as director of diff erent banks, insurance and fi nancial insti tuti ons, eff ect from October 21, 2013. said a news release. He possesses impressive academic New MD of Bangladesh Commerce Bank credenti als. He had his early educati on Senior banker Mr. Abu Sadek Md. Sohel at Pakistan Cadet College, Sargodha, has joined Bangladesh Commerce Bank Pakistan. Aft er liberati on, he returned Limited as the Managing Director & CEO. to Bangladesh and passed his SSC and HSC examinati ons from the University Mr. Abu Sadek Md. Sohel started his Laboratory High School and Notre Dame College, Dhaka, career in 1977 as senior offi cer in Sonali respecti vely. He completed his B.Sc and M. Sc degrees from Bank Limited. During his professional the University of Dhaka and MBA from the Insti tute of Business career he had rendered effi cient services Administrati on (IBA) of the same university. to signifi cant divisions and branches as the General Manager of Sonali Bank Ltd, Mr. Rafi q has got rich and long experience in the banking industry Agrani Bank Limited as well as Bangladesh for about thirty (30) years. He has served in almost all areas of Krishi Bank Ltd. Later on, he had been promoted as the Deputy banking including that of a Branch Manager. He began his career with IFIC Bank Limited as a probati onary offi cer in 1984 and Managing Director of Agrani Bank Limited. worked there in a multi tude of roles for 14 years. Aft er that, he He joined Social Islami Bank Ltd (SIBL) in 2005 as Deputy Managing joined Eastern Bank Limited (EBL) in 1998 as Vice President. Prior Director and was thereaft er promoted as the Additi onal Managing to his joining MTB, he was the Area Head and SEVP, Corporate Director. He rendered both the responsibility of Additi onal Banking of EBL. He was one of the core members of the EBL Managing Director and Deputy Managing Director. Corporate Banking team and associated with its growth since New Head of Transacti on Banking at StanChart incepti on in 2002. New MD of Standard Bank Hussain Shirazie is now the new Head of Transacti on Banking (TB) at Standard Chartered Bank Bangladesh. He has been with Md. Nazmus Salehin has joined as Managing Director of Standard Standard Chartered for more than six years, having managed the Bank Limited.Prior to joining this post he was the Additi onal TB business in Qatar and, more recently, based out of Bahrain, has Managing Director of the Bank for the last three years. managed the Bahrain, Saudi Arabia, Oman, Jordan and Lebanon Salehin having Masters Degree in Physics from Dhaka Universti y markets. Hussain has 23 years of Investment, Corporate Banking started his career with Sonali Bank in 1979 as a Probati onary and Transacti on Banking experience in various roles in UAE, Offi cer. He held various positi ons as Senior level Executi ve and in- Pakistan, Australia, Qatar and Bahrain.

MTBiz 11 BANKING INDUSTRY NEW PRODUCTS & CSR

IFIC Bank donates Tk 10 lakh to Biswashahitya Kendra Nati onal Tea Company Ltd in FMCG (listed), Square Consumer The authority of IFIC Products Ltd in FMCG (non-listed), BSRM Steels Ltd in steel (listed), Bank handed over a Ratanpur Steel Re-Rolling Mills Ltd- RSRM in steel (non-listed), cheque of Tk 10 lakh Singer Bangladesh in engineering (listed), BRB Cables Industries to Biswashahitya Ltd in engineering (non-listed), RAK Ceramics (Bangladesh) Ltd in Kendra at a simple ceramics (listed), Farr Ceramics Ltd in ceramics (non-listed) and ceremony at the Square Texti les Ltd in texti le (listed) categories. Biswashahitya Kendra DBBL provides Tk 70 lakh to Kachi Kanchar Mela near Bangla Motor Dutch-Bangla Bank provided fi nancial support of Tk 70 lakh to crossing in the city on Sunday, says a press KendriyoKanchi-KancharMela, a children cultural organisati on release. President and Chief Executi ve of Biswashahitya Kendra for renovati on of its building at Segunbagicha including extensive Prof Abdullah Abu Sayeed received the cheque from Managing refurbishment of the auditorium. Director and CEO of IFIC Bank Shah A Sarwar. The money will Bank Asia donates Tk 50 lakh to Ahsania Mission Hospital be spent for decorati ng the newly built conference room of Bank Asia has donated Tk Biswashahitya Kendra. 50 lakh to Ahsania Mission Dhaka Bank donates Tk 4,45,000 to Anowara Foundati on Cancer and General Dhaka Bank Limited donated Tk 4,45,500 to Anowara-Nasimuddin Hospital (AMCGH) Memorial Foundati on for computer learning of the students for constructi on of recently. pati ents waiti ng lounge, procedure and surgical Khondker Fazle Rashid, Managing Director of Dhaka Bank Limited ward in the second fl oor handed over the cheque to Professor Dilara Choudhury, Chairman of the hospital building. of the Foundati on, said a press release.Deputy Managing Director A Rouf Chowdhury, EmranulHaq, Senior Executi ve Vice President and Company Chairman of the bank handed over the cheque to KaziRafi qulAlam, Secretary Arham Masudul Huq were also present. President, Dhaka Ahsania Mission at the bank’s corporate offi ce at City Bank comes up with plati num credit card Rangs Tower, PuranaPaltan on Sunday, said a press release. CITY Bank and American Express yesterday launched City Bank MTB Launches MTB Gift Cheque American Express Plati num Credit Card, which will bring with it a Mutual Trust Bank Ltd. whole array of services and benefi ts for the affl uent and high net (MTB) launched MTB worth individual (HNI) customers in Bangladesh. The card off ers tailor-made benefi ts to suit the lifestyle requirements of high Gift Cheque for its spenders in the country, the bank said in a statement. customers at a simple ceremony held at the BB launches digital map on fi nancial services Bank’s Corporate Head Bangladesh Bank Offi ce, Gulshan, Dhaka Governor, Ati ur on October 1, 2013. Md. Rahman, launched the Hedayetullah, Chairman web portal, Digital Map of the Bank’s Executi ve of Financial Services Committ ee, launched the Gift Cheque as the Chief Guest by in Bangladesh, at a handing over a Gift Cheque to Ms. Khadiza Iqbal Shila, a valued functi on at the BB customer of the Bank. Training Academy. MTB Gift Cheque is available from any branch of the Bank for both The project geo- account and non-account holders. Gift cheques are available in mapped the vast denominati ons of Taka 500 and can be encashed from any MTB majority of places branch. A premium of 7%, 8% and 9% will be paid, if the gift cheque where people can access fi nancial services, including banks, is encashed aft er 3 months, 6 months and 1 year. No document is microfi nance and post offi ce branches, as well as savings, required for the purchase of the gift cheque and no service charge cooperati ves and mobile money agents.By clicking on FSPMaps. will be applicable. com, policymakers and people can receive informati on on what PM opens Exim Bank Agri Varsity services are available in 65,534 branches and booths of banks and other fi nancial insti tuti ons and fi nancial service providers all over Prime Minister Sheikh the country. Jake Kendall, program offi cer (Financial Services for Hasina inaugurated the the Poor) at the Gates Foundati on, briefed on the project. Exim Bank Agricultural 13 cos win Dun and Bradstreet Awards University, Bangladesh (EBAUB) at a functi on at Country’s thirteen reputed corporate houses received “Dun and Ganabhaban in Dhaka on Bradstreet Corporate Awards” for the year 2012 Saturday in Wednesday. recogniti on of their outstanding performance and contributi on to the economy. The fi rst agriculture university under the Industries Minister Dilip Barua handed over the awards to private sector was opened in the country where Prime Minister the winners as chief guest at a ceremony at the Bangabandhu Sheikh Hasina was present as chief guest, said a press release. Internati onal Conference Centre (BICC) in the city. Chairman of the Board of Trustees of EBAUB and Exim Bank Dun & Bradstreet South Asia Middle East Limited, a leading global Limited Md. Nazrul Islam Mazumder delivered welcome speech at informati on and knowledge provider, gave the awards in seven the functi on. The university has already opened 16 departments categories. The winners are: Square Pharmaceuti cals Ltd in listed under the Faculty of Agriculture and the Faculty of Agricultural pharmaceuti cals category, Eskayef Bangladesh Ltd in non-listed Economics.Moreover, Faculty of Graduate Studies, Faculty of pharmaceuti cals category, Bata Shoes Company (Bangladesh) Ltd Fisheries and Veterinary Science and Animal Sciences will open in leather (listed), PICARD Bangladesh Ltd in leather (non-listed), very soon.

12 MTBiz NATIONAL NEWS DEVELOPMENT

17 projects worth Tk 4,579cr get approval ADP spending dips on electi on distracti on The Executi ve Committ ee of the Nati onal Economic Council ADP implementati on (Ecnec) yesterday approved 17 projects worth Tk 4,579 crore. dipped 2 percentage Prime Minister Sheikh Hasina in the chair approved the projects points in the fi rst quarter in a meeti ng, of which around Tk 1,642 crore will come as foreign of fi scal 2013-14 from a assistance. Of the project, the Coastal Town Infrastructure year ago owing to diversion Development Project involves a cost of Tk 875 crore, which would of ministers’ att enti on pave the way for developing climate resilient infrastructures towards the nati onal in eight coastal municipaliti es. The Asian Development Bank, electi on.Between July and Strategic Climate Fund and Bill & Melinda Gates Foundati on will September, only 11 percent provide Tk 705 crore to the project. Ecnec approved another of the allocati on for Annual project aiming at introducing around 1.5 lakh prepaid electricity Development Programme meters in Mymensingh and Comilla city to improve the quality of (ADP) was used, whereas customer service and stop revenue evasion. Germany will provide the implementati on was 13 percent in the corresponding period a loan of Tk 104 crore to implement the two-and-a-half-year of fi scal 2012-13. project. Some Tk 65,872 crore has been set aside for ADP in the budget for Donors agencies impressed with development acti viti es fi scal 2013-14; of the amount, Tk 6,994 crore was expended in the Donor agencies yesterday praised the country’s development fi rst quarter. works and vowed to conti nue with their assistance to accelerate The local government division has spent 21 percent of its the acti viti es.The reassurance came at a meeti ng between the allocati on in the fi rst three months, the highest among the 10 government and the Local Consultati ve Group (LCG), a platf orm biggest ministries and divisions, according to stati sti cs from of representati ves of development partners, att ended by Finance Implementati on Monitoring and Evaluati on Division (IMED).In Minister AMA Muhith as chief guest. contrast, the implementati on in the other nine big ministries and Earlier, the fi nance minister formally inaugurated the principal divisions such as the power division, bridge division, energy and offi ce of Probashi Kallyan Bank (PKB) and a help desk in the mineral resources division, health and family welfare ministry and specialised bank.The services include informati on on bank account, the roads division ranges from 0.16 percent to 10 percent. e-banking, banking services, account opening and closing, and remitt ance. The desk will also help expatriates solve their personal Among the 54 ministries and divisions, 23 implemented 0 to problems and provide legal advisory services. 8 percent of their allocati ons.Of the amount used in the fi rst three months of fi scal 2013-14, Tk 5,033 crore came from the JS passes Grameen Bank Bill 2013 government’s own fund and Tk 1,961 crore from foreign aid. The Parliament passed Tuesday the much talked-about ‘Grameen ADB will give $110m loan for BD’s infrastructure Bank Bill 2013’ providing for abolishing the military government- development thru’ PPP promulgated ‘The Grameen Bank Ordinance 1983’. The Asian Development Bank (ADB) will provide US$110 million as The authorised capital of Grameen Bank was Tk 3.50 billion (350 loan for Bangladesh’s infrastructure development through public- crore) earlier. The Bank’s paid-up capital will be increased to Tk 3 private partnership. billion (300 crore) from Tk 500 million (50 crore). The government shares of the paid-up capital will be 25 per cent and the government ADB said Monday it would provide the loan to the state-owned could increase its paid-up capital from ti me to ti me. Infrastructure Development Company Ltd. (IDCOL) for facilitati ng the infrastructure development in Bangladesh.Out of the proposed The Board of the Bank will comprise 12 members. The managing funds, ADB will provide a $100 million aid to the state-owned director of the Bank will be a director, but he will not have the IDCOL for investment in projects in power generati on, water and voti ng right.It would need prior approval from Bangladesh Bank to sanitati on, transportati on, and informati on technology. appoint one of them as managing director.The managing director will be allowed to serve the Bank up to the age of 60 years.Like Private investors, meanwhile, struggle to get the long-term the other banks, Grameen Bank will also have to submit its annual fi nancing they need from underdeveloped capital markets or report to the Bangladesh Bank. from banks that are hesitant to provide long-term loans because IFC ready to fi nance ‘green projects’ in BD of potenti al asset-liability mismatches.Due to lack of adequate funds, the country suff ers from a chronic infrastructure shortf all. The Internati onal Finance Corporati on (IFC) has opened up its Electricity shortages cause an annual esti mated loss of 2.0 fi nancing off er for diff erent sectors in Bangladesh, mainly texti le per cent of gross domesti c product (GDP). Poor transport and and poultry, as the country’s fi nancial sector has developed communicati ons networks also hold back the economy, while poor capacity to analyze and fi nance the ‘green projects’. sanitati on and water systems undermine health. IFC Director (South Asia) Serge Devieux said this to the FE ADB in its statement said the $110 million in fi nancing under the during an exclusive interview in the city on the sideline of the “Public Private Infrastructure Development Facility” builds on sustainable business conference Saturday.He said the IFC has similar previous ADB fi nancing to IDCOL of $165 million approved been fi nancing big projects in various sectors globally, like - in October 2008 which has been fully committ ed. infrastructure, agri business, manufacturing, power and energy etc, and the organisati on is now focusing on Bangladesh.”The IFC BD got $14.32b ADB aid unti l 2012 is now emphasising Bangladesh. The IFC director said Bangladesh’s The Asian Development Bank (ADB) provided Bangladesh with a speedy industrializati on and rapid economic growth have put the total of US$14.32 billion in assistance ti ll 2012. This was revealed in environment at risk.” the publicati on ti tled “Bangladesh-ADB: 40 years of Development The IFC South Asia director praised the central bank for its Partnership”, released by the Manila-based multi lateral lender pioneering role in formulati ng regulatory framework for sustainable Wednesday. Of the total assistance, ADB provided $14.1 billion in banking.He said the banks having the ‘green banking’ principles loans for 234 projects while $221 million was made available in the can use the IFC fund in compliance with the organisati on’s norms. form of grants for 389 technical assistance projects.

MTBiz 13 NATIONAL NEWS BUSINESS & ECONOMY

The beginning of a new era for entrepreneurship in award as the No 2 brand in this category, NOKIA as No 3, Rupchada Bangladesh Soyabin as No 4, Horlicks as No 5, Parchute Advanced as No 6, With a robust youth Grameenphone as No 7, Radhuni Masala as No 8, Sunsilk as No 9 populati on having and Close Up as No 10. access to quality A book ti tled “Brand Breakout” which was writt en by head of educati on and experti se strategy of Tata Group Professor Nirmalya Kumar’s was unveiled in the Informati on at the award giving ceremony.Prof Nirmalya in his new book Technology sector, highlighted how an emerging market brand will go global. Bangladesh has the tool to fi ght poverty and DCCI publishes handbook to create new entrepreneurs unemployment through DCCI publishes handbook to create new entrepreneurs. President self-employment. Md Abdul Hamid, Bangladesh Bank Governor Dr Ati ur Rahman Entrepreneurship not only helps gain independence but also and DCCI President Md Sabur Khan holding the ‘Handbook of enables self-starters to create opportuniti es for others. Entrepreneurship’ aft er unveiling it at the inaugural ceremony of Through “Global Entrepreneurship Week” (GEW), the world’s the ‘Entrepreneurship and Innovati on Expo’ organised by the DCCI largest celebrati on of innovators and job creators, startups are at a city hotel recently. launched during one week each November that bring ideas to life, Dhaka Chamber of Commerce and Industry (DCCI) published a drive economic growth and expand human welfare. As Bangladesh handbook for creati ng new entrepreneurs and entrepreneurship conti nues to progress, amidst the current politi cal unrest and development aiming to move the country’s economy forward. instability, StartupBashBD decided to highlight our potenti al in DCCI in associati on with Bangladesh Bank will implement the plan generati ng innovati ve business ideas and implementi ng them in to create 2000 new innovati ve entrepreneurs. front of the whole world. The six-day-long event was hosted from November 18 ti ll 23, honouring the spirit of startups throughout The main objecti ve of the handbook is to moti vate country’s young the world. people to become entrepreneurs by giving proper guidelines and The programme included sessions such as creati ng the bridge informati on so that they could get adequate mental strength. The between entrepreneurs and investors, startup pitches, using handbook will also help our frustrated young generati on to learn technology to solve social problems, showcasing the stories of how they can be entrepreneurs and how they will get fi nance to successful entrepreneurs, startup toolbox and must have skills. start their ventures. The missed videos and materials of StartupBash can be accessed The handbook of entrepreneurship development published by fromfacebook.com/startupbashbd. DCCI would be helpful for the beginners to start their business Economic units double in last 10 years easily and survive in future as well. The handbook is now available at DCCI offi ce for sale. The handbook can also be downloaded free The number of economic units in the country doubled in last 10 from www.business.org.bd. years and stood at 80.76 lakh in 2013 from 37.08 lakh in 2003, the provisional data of the latest economic census showed. NBR gets 0.5m returns involving Tk 11 billion in tax unti l Oct According to Economic Census-2013, the number of all the three 31 kinds of economic units—permanent establishments, temporary The Nati onal Board of Revenue (NBR) has received some 500,000 establishments and economic households—increased by 118 returns involving Tk 11 billion in income tax from the individual percent in the period. Bangladesh Bureau of Stati sti cs on Sunday taxpayers unti l October 31 last. unveiled preliminary report of the census at a programme at its conference room in the capital with fi nance minister Abul Maal The income tax wing received Tk 13 billion in income tax against Abdul Muhith in the chair. 600,000 returns last year. This year, taxpayers were aware of the extension of ti me for income tax return due to the volati le politi cal Analysing the preliminary fi ndings, BBS said that rural areas were situati on coupled with long public holidays for Eid-ul-Azha and dominati ng in operati ng economic units and the base of Bangladesh Durga Puja. economy got stronger and moved towards formalisati on during the period. According to the data, more than 58 lakh or 72 percent According to the income tax ordinance, the NBR can impose of economic units are located in rural areas compared with 22.58 penalty of Tk 1,000 at a ti me and Tk 50 for per day if any TIN holder lakh or 28 percent in urban areas. Economic enti ty in rural areas fails to submit tax return within the deadline. It is mandatory for increased by 150.60 percent in the period while economic units the TIN holders to submit tax returns despite not having taxable in urban areas grew by 62.90 percent. According to economic income. People with income below the taxable limit have to census-2003 that was conducted in 2001 and 2003, economic submit nil return to the tax offi ces for having a TIN. units in rural and urban areas were 23.22 lakh and 13.86 lakh NBR to off er VAT exempti on to local fi rms respecti vely. The revenue board has decided to off er Value Added Tax (VAT) Bangladesh Brand Forum awards best brands exempti on to local companies parti cipati ng in internati onal Bangladesh Brand Forum (BBF) in tenders as provided to foreign companies in a bid to ensure a collaborati on with world’s leading level-playing fi eld. The VAT wing of the Nati onal Board of Revenue brand research company Millward (NBR) is preparing rules to implement the decision that has been Brown Bangladesh on Saturday incorporated in the Finance Act-2013. awarded top 10 local brands, top 10 overall brands and best 30 brands in Currently, the local companies have to pay 15 percent VAT on 30 categories. The BBF awarded these procurement of machinery for any large project, while the foreign best brands at the “5th Best Brand companies are enjoying VAT exempti on, in accordance with the Award Bangladesh 2013” at Pan Pacifi c internati onal or bilateral treaty. Foreign companies are enjoying Sonargaon Hotel in the city on Saturday tax exempti on while importi ng machinery for large projects. But night. Millward Brown Bangladesh has local companies have to pay VAT when they procure the similar conducted a countrywide consumer machinery from domesti c or internati onal sources. research to fi nd out the best brands of Industry insiders said the discriminatory tax system has created Bangladesh. an uneven competi ti on for the local companies. The companies The award for No 1 brand in the requested the revenue board several ti mes in the past to resolve overall top brand category went to the matt er. Following concern expressed by the local companies, Fair and Lovely while Lux received the the tax authoriti es have addressed the issue.

14 MTBiz NATIONAL NEWS BUSINESS & ECONOMY

Early trends suggest GDP growth to take a hit: CPD The full-fl edged currency museum will help young people to know The Centre for Policy Dialogue (CPD) said Tuesday dull private the country’s history of currency, said Ati ur Rahman, governor investment, low revenue generati on and slow development of Bangladesh Bank. “It has been established with modern project implementati on would fi nally hamper the electi on year technology to att ract visitors.” Every country in the world has its gross domesti c product own currency museum, Rahman said. The museum will highlight (GDP) growth. The CPD the identi ty of Bangladesh like its nati onal fl ag does, he said. “For made the electi on year me, getti ng to know about the history of money is a way to look at economic predicti ons the history of the world.” based on the fi rst Infl ati on drops to 7.13pc in Sept quarter indicators in the The country’s point-to-point infl ati on in September has marginally current fi scal year (FY eased to 7.13 percent, as prices of some food and non-food items 2013-14). have decreased over the months, offi cial data showed. According The CPD held a media to the Bangladesh Bureau of Stati sti cs (BBS) data, the infl ati on has briefi ng in its conference dropped by 0.26 percentage points in the last month from 7.39 room to make the percent in the previous month (August) of the current fi scal year economic predicti ons (FY), 2013-14. and also present the electi on year economic trends. The CPD BBS director general Golam Mustafa Kamal unveiled the data prepared the study report under the Independent Review of at a press briefi ng at his offi ce Monday. Since July this year the Bangladesh Development (IRBD) programme. BBS is considering 2005-06 FY as the base-year in calculati on of The rate of infl ati on went up by 0.6 percentage points to 7.4 in consumer price index (CPI) and infl ati on. Earlier, it calculated CPI September 2013, the report said adding that the food infl ati on and infl ati on considering 1995-96 as the base-year. Considering increased by 1.5 percentage points to 6.7 at the same ti me. 2005-06 as the base-year, the food infl ati on on point-to-point basis Mr. Bhatt acharya said the growth in revenue collecti on had been lessened by 0.16 percentage points to 7.39 percent in September, 16.2 percent during the July-August period of the current fi scal compared to 8.09 percent in August. The non-food infl ati on also against the annual target of 25.3 percent. fallen by 0.41 percentage points to 5.94 percent in September, compared to 6.35 percent in the previous month. “The growth in revenue collecti on started slowing down from the last quarter of FY ‘13 with only 13 percent growth recorded. About The BBS data also revealed that the point-to-point infl ati on in the Annual Development Programme (ADP) implementati on, both the rural and the urban areas also declined in September. the report said during the fi rst two months of the FY14, only 6.2 Infl ati on in the rural areas in the month under review dropped to percent of allocati on had been spent, whereas the corresponding 6.77 percent from 6.90 percent in the previous month. In the rural fi gure in the FY 13 was 8.3 percent. areas, food infl ati on came down to 7.43 percent in September from 7.50 percent in August. Non-food infl ati on also decreased The CPD predicted that a number of factors, however, might slightly to 5.59 percent from 5.83 percent, the BBS data showed. In impact Bangladesh’s competi ti veness and export performance the urban areas, point-to-point infl ati on dropped to 7.82 percent during the next few months. last month, compared to 8.34 percent in August this year. BoI receives record investment proposals in July-Sept period Prices of food items in urban areas lowered to 9.11 percent in this Investment proposals registered with the Board of Investment September from 9.52 percent in August, and prices of non-food (BoI) marked a remarkable rise of 71.66 percent in July-September items dropped to 6.44 percent from 7.08 percent. The government period of the fi scal year (FY) 2013-14 over that of the corresponding has set a target of keeping the average infl ati on within 7.0 percent period of the last FY. in the current fi scal. According to the BOI offi ce, investment proposals amounti ng to Tk Industrial sector sees decelerati ng growth 229.37 billion against 274 industrial units were registered during Unnayan Onneshan, an independent multi disciplinary think- the three months against proposals worth Tk 133.62 billion, which tank, in its latest issue of Bangladesh Economic Update says that were recorded in April-June period of the FY 2012-2013. the industrial sector is witnessing decelerati ng rate of growth, Of the total, proposals worth Tk 68.66 billion were registered indicati ng its contracted share in gross domesti c product (GDP) for local investment, while proposals worth Tk 160.70 billion and reducti on in expansion of GDP in the current year. The growth for foreign and joint venture investment for setti ng up of 237 in manufacturing was 9.34 percent in FY 2012-13, which was lower industrial units, a BoI press release said Monday. than those of 9.37 and 9.45 percent in FY 2011-12 and FY 2010-11 respecti vely.”If the current trend conti nues, share of industry in Among the proposals, some 72.57 percent investment was GDP in 2013-14 might decline to 32.28 from 31.33 of 2012-13,” registered for the industrial sector followed by 12.36 percent for the Unnayan Onneshan said. The research organizati on reasons the engineering industry, 6.73 percent for chemical industry, 1.5 that indicators of industrial performance such as industrial index, percent for food and allied sector, 1.06 percent for tannery and disbursement of term loan, opening and sett lements of lett er of leather industry, 0.96 percent for agro-based industries during the credits (LCs) and investment demand suggest sliding down. last three months. Pre-polls tension may bring down GDP growth to 5.8pc Investment to the tune of Tk 133.62 billion was proposed for Warns ADB in Asian Development Outlook Update setti ng up of 369 industrial units during the April-June period of the FY 2012-13. The Asian Development Bank on Wednesday projected that Bangladesh’s economic growth would decline further to 5.8 per Currency museum opens in Mirpur cent in the current fi scal year, 0.2 percentage point lower than its A currency museum, fi rst of its kind in Bangladesh, was inaugurated earlier projecti on, due mainly to politi cal tension ahead of next yesterday to highlight the history of taka and its evoluti on. Speaker general electi ons. Lower growth in export and slower investment Shirin Sharmin Chaudhury inaugurated the Taka Jadughar at and consumer demand will also play a role in sluggish growth Bangladesh Bank’s training academy in Mirpur. The museum will of gross domesti c products in the country in FY2013-14, said help people get acquainted with the lifestyle, educati on, culture ADB in its Asian Development Outlook Update-2013. Earlier, the and various aspects of archaeological developments of human multi lateral lender had projected that the country would att ain civilisati on through coins and currencies of diff erent eras, the economic growth at 6 per cent, much lower than the government’s speaker said. “We can preserve our culture and heritage through target of 7.2 per cent set for the year. The ADB also projected that this museum as the currencies help us remember the history of infl ati on would be at 7.5 per cent, lower than the 7.7 per cent in the language movement and liberati on war,” she said. the previous year.

MTBiz 15 BANGLADESH ECONOMY

BANGLADESH TRADE FORECAST has enabled low-cost manufacturing industries such as texti les to Export growth should pickup in 2013-15, helping to restore grow rapidly over the past decade. Bangladesh now has a share of GDP growth back to 6%. The USA will remain the top market for more than 10% of the world market for clothing and apparel. Trade Bangladeshi exports in 2030, but buoyant intra-Asian trade fl ows within Asia has been boosted by greater regional cooperati on will prove more dynamic in terms of growth. with a proliferati on of free trade agreements having been signed in recent years. Although emerging market growth has slowed in • Exports rose by 7.2% on the year in January-May 2013, having recent months, it will sti ll support an expansion of trade and by grown by 6.2% last year. The growth should increase further 2020 we expect the share of Bangladeshi exports going to Asia to due to the restorati on of demand from the USA and Europe. have more than doubled to 15%. • The authoriti es are committ ed to modernising the economy CORRIDORS OF CHOICE and improving its infrastructure. • Clothing and apparel is Bangladesh’s largest export sector, • The longer-term outlook is bright. with expected growth of 5% helped by wage competi ti veness. Although wages will pa,. gradually rise, Bangladesh will remain internati onally The top three markets for Bangladeshi exports are the USA, competi ti ve, with the clothing sector contributi ng almost a Germany and the UK. quarter of the increase in exports out to 2015. EQUIPPING FOR GROWTH • The second largest sector is texti les and wood manufactures and this sector will contribute almost a third of the increase in In Bangladesh, infrastructure is in urgent need of improvement. In exports out to 2015. parti cular, expansion of the transport and • Animal products are Bangladesh’s third largest export sector communications and animal products and animaland plant materials will network & power contribute 15% of the increase in exports from 2013 to 2015. gernerati on capacity • Exports to emerging Asia will grow by more than 15% from is essenti al to 2013 to 2020, parti cularly in clothing, other manufacturing support long-term and animal products to meet the growing demand for these growth above 5% pa. products from the rapidly increasing middle classes in China However, over the and the rest of East Asia. Exports to Lati n America will also next twenty years the grow strongly with growth averaging more than 10% out to proporti on of imports related to infrastructure will rise to more 2020, largely refl ecti ng trade in clothing and texti les. than a third. LONG-TERM OUTLOOK FOCUS ON INFRASTRUCTURE Bangladesh is located in the world’s most dynamic trading region • Bangladesh is ranked 118th in the world for its infrastructure and has established a strong foothold in clothing and apparel. The according to the World Economic Forum. This is the lowest of demographic trend is very favourable and Bangladesh is seeking any country in our sample. Parti cular att enti on needs to be toboost its trade prospects further by setti ng up free trade with paid to the transportati on network and capacity & reliability many of its neighbours, hoping to broaden its export base and of power generati on. encourage FDI. • But progress is being made and over the next twenty years the CORRIDORS TO WATCH proporti on of imports related to infrastructure will rise to more than a third. A rising middle class The government’s across Asia will aim is to more than help to drive strong double electricity trade fl ows from generati on within Bangladesh to the the next few years, rest of Emerging Asia at a cost of around and by 2030 India USD 15bn. will be Bangladesh’s third largest export • But the World desti nati on. Over the Economic Forum next twenty years has expressed China, India, Vietnam concerns about the honesty and transparency of public and Malaysia will be the fastest growing export desti nati ons. funding decisions and fi nancing projects isa major challenge as a high level of bureaucracy deters private funding. The Exports to Turkey, notably of clothing, apparel, texti les and wood government relies on public-private partnerships in this manufactures will grow strongly out to 2030 and within twenty area and, unti ltax reforms enable more government-funded years Turkey will be Bangladesh’s fourth largest export desti nati on. projects, progress will be slow. India, China, Vietnam and Turkey will be Bangladesh’s fastest SHORT-TERM OUTLOOK growing import partners with industrial machinery, texti les and wood manufactures and transport equipment the fastest growing Trade fl ows are expected to be stable over the next six months with import sectors. By size animal products, cereals, sugars, coff ee, tea, 41.7% of respondents expecti ng trade volumes to be unchanged. spices and beverages will be the largest import sectors, refl ecti ng Although respondents have become less pessimisti c about the the basic needs of Bangladesh’s large populati on. outlook for the global economy, slower growth in Asia in recent months has dimmed their view of growth prospects in these key CONCLUSION trading markets. Bangladesh has a fi rm foothold in the global market for clothing CURRENT VIEW and apparel and although the near-term outlookfor this sector is clouded by safety concerns, oncereforms are implemented Last year, 8% of Bangladeshi exports went to Asia whilst nearly this should strongly boost FDI.Exports of animal products are 20% went to North America and more than 40% went to Europe. also key and Bangladeshshould be able to take advantage of the Wages are lower in Bangladesh than in many Chinese regions favourabledemographic trends and rapidly growing middleclasses and South-East Asian countries, and this competi ti ve advantage in emerging Asia to expand and modernize its agricultural sector.

16 MTBiz

MTB NEWS & EVENTS

1ST MITS CONFERENCE 2013

Date: 16/11/2013 Venue: MTBTI, MTB Square, Tejgaon, Dhaka 1208 MTB LAUNCHES GIFT CHEQUE

Date: 01/10/2013 Venue: MTB Centre Corporate Branch, MTB Centre, 26 Gulshan Avenue, Dhaka - 1212 SIGNING CEREMONY OF SYNDICATED FACILITY BDT 3,960 MILLION FOR STAR CERAMICS PVT. LTD. MTB AS COARRANGER

Date: 03/10/2013 Venue: Radisson Blu Water Garden Hotel Dhaka. Airport Road Dhaka Cantonment, Dhaka 1206

SIGNING CEREMONY OF SYNDICATED DEBT FINANCING USD 40 MILLION & BDT 5,908 MILLION FOR BSRM STEEL MILLS LTD.

Date: 08/10/2013 Venue: The Westi n Dhaka, Main Gulshan Avenue, Gulshan Ave, Dhaka 1212

18 MTBiz MTB NEWS & EVENTS

FINANCE MINISTER MR. AMA. MUHITH’S VISIT TO MTB CENTRE TO INAUGURATE SPBA ART SHOW AND FIRST EVER STRUCTURED ART AUCTION

The Finance Minister formally inaugurates the event The Finance Minister seen cutti ng the ribbon before entering The MTB Sky to inaugurate the SPBA Art Show & Aucti on. Also seen are the MTB Chairman Dr. Arif Dowla, Date: 01/10/2013 SPBA Chairman & MTB Director Anjan Chowdhury & SPBA Venue: MTB Centre Corporate Branch, MTB Centre, 26 Gulshan Avenue, Dhaka - 1212 Founding Chairman & Eastern Housing Vice Chairman Elthem Kabir TRAINING ON MONEY LAUNDERING PREVENTION & COMBATING THE FINANCING OF TERRORISM

Date: 9/11/2013 Venue: Chitt agong MTB CELEBRATES 14TH FOUNDING ANNIVERSARY

Date: 24/10/2013 Venue: MTB Square, 210/A/1 Tejgaon Industrial Area, Tejgaon, Dhaka 1208 AGREEMENT SIGNING CEREMONY BETWEEN CENTRAL PROCUREMENT TECHNICAL UNIT CPTU & MTB

Date: 3/11/2013 Venue: IMED Conference room, Sher-e-Bangla Nagar, Dhaka

MTBiz 19 INTERNATIONAL NEWS

U.S. CONSUMER CONFIDENCE AT SIX-YEAR HIGH, EUROPEANS and the wider global economy. ALSO MORE UPBEAT - SURVEY In its bi-annual report, the US Treasury said that domesti c demand Consumer confi dence in the United States reached a six-year high growth in Germany had been “anaemic”. “Germany’s anaemic in the third quarter, as prospects for jobs and personal fi nances pace of domesti c demand growth and dependence on exports improved, and also rose sharply in Europe, a global survey showed. have hampered rebalancing at a ti me when many other euro-area Americans were among the most bullish consumers in a quarterly countries have been under severe pressure to curb demand and survey by global informati on and insights company Nielsen, compress imports in order to promote adjustment,” the Treasury refl ecti ng growing confi dence that the world’s biggest economy is said. a on a sustainable growth path. “In the United States, the labor It also reiterated its view that the Chinese yuan conti nued to market is slowly healing, and low interest rates are helping the remain “signifi cantly undervalued”. The report has criti cised housing market come back and bringing up the stock market, Chinese policy before, but criti cism of German economic policy is which is perhaps especially benefi cial to higher-income consumers rarer. with more assets,” said Venkatesh Bala, chief economist at The Germany, the eurozone’s largest economy, has been one of its key Cambridge Group, a part of Nielsen. drivers of growth in recent years. Its importance to the 17-nati on Indonesia remained the most bullish consumer market worldwide, bloc has only increased since the development of the region’s followed by the Philippines and India, as in the previous quarter, debt crisis, which has aff ected other bigger economies such as but confi dence levels in all three emerging markets dipped. A Italy and Spain. Germany has been one of Europe’s stronger reading below 100, however, signals sti ll relati vely low consumer economic performers and its exports prowess is seen as one of its morale. key strengths. It narrowly avoided recession earlier this year, but Portugal saw the biggest jump in consumer confi dence globally GDP in the second quarter of 2013 was driven up by demand from in the third quarter, by a heft y 22 points, while Ukraine saw the both consumers and businesses. Analysts said that while Germany biggest drop, by 13 points. Portugal’s rebound led a pick-up in could benefi t from boosti ng domesti c demand, the criti cism consumer senti ment in peripheral euro zone countries that have levelled at its policies was unfair. been grappling with tough austerity measures as they sought to In recent years, the US and many other economies have alleged cut heavy debt levels. that China tries to keep the value of its currency arti fi cially low. The Nielsen survey was conducted between August 14 and They say that, by doing so, Beijing gives an unfair advantage to September 6 and covered more than 30,000 online consumers its exporters, as an undervalued currency makes its good cheaper across 60 markets. to foreign buyers. For its part, China has been looking to loosen its grip on the currency as it looks to push for a more global role JAPAN’S THREE BIGGEST BANKS FACE YAKUZA LINKS INQUIRY for the yuan. But Beijing has maintained that a sudden and sharp Mizuho Financial Group chairman Yasuhiro Sato bows in apology appreciati on in the value of the yuan will hurt its overall economy. aft er it emerged Japan’s second biggest megabank had lent money The yuan has risen nearly 12% against the US dollar since June to people linked to the yakuza. 2010. While the Treasury acknowledged that the yuan had been rising, it said the appreciati on was “not as fast or by as much as Japan is to investi gate is needed”. However, the report did not label China as a currency the country’s three manipulator. biggest banks over possible ti es to GERMAN ECONOMIC STRENGTH: THE SECRETS OF SUCCESS organised crime aft er The German educati on system is much more geared to vocati onal it emerged that one training than many of its economic competi tors. major banking group had lent money to Imagine a country whose inhabitants work fewer hours than people connected to almost any others, whose workforce is not parti cularly producti ve the yakuza. and whose children spend less ti me at school than most of its neighbours. Hardly a recipe for economic success, you might think. A recent loan scandal involving Mizuho Financial Group, Japan’s second biggest megabank, highlighted organised crime’s att empts But the country to gain a foothold in the country’s fi nancial sector. described above is none other A consumer fi nance fi rm affi liated with Mizuho was found to have than Germany, extended more than $2m dollars (£1.2m) in loans to people ti ed Europe’s industrial to the yakuza, the name given to Japan’s infl uenti al network of powerhouse and crime syndicates. the world’s second Mizuho’s president, Yasuhiro Sato, will receive no salary for six largest exporter; months. Dozens of other Mizuho executi ves will have their pay cut. a country whose economy has single- A total of 230 loans, mainly for buying cars, were made by Orient handedly stopped the eurozone falling back into recession and the Corp, a consumer credit company fi nanced by Mizuho. Initi ally, only nati on rich enough to save the euro. So why is the German Mizuho said only the bank’s compliance offi cers had known about economy so powerful, and what lessons can the rest of us learn the loans, but later conceded that senior executi ves had also been from it? aware of them. Euro Bliss In recent years Japan’s crime syndicates have made bold att empts to move into white-collar crime aft er crackdowns on traditi onal There is no doubt that Germany has benefi ted greatly from sources of income such as prosti tuti on, loan sharking, gambling the euro. By getti ng into bed with more sluggish economies in and drug smuggling. The failure to rid Japan’s fi nancial sector southern Europe, Germany adopted a much weaker currency of yakuza involvement has strengthened calls for the police and than would otherwise have been the case - as one of the very few banks to share informati on about possible criminal infi ltrati on. countries in the world running a balance of payments surplus, the deutschmark would have been a great deal stronger than the euro. US CRITICISES GERMANY AND CHINA POLICIES This has provided a terrifi c boost to German exports, which are The US has criti cised Germany and China’s economic policies, cheaper to overseas consumers as a result. But this goes only saying that their export-led growth model is hurti ng the eurozone

20 MTBiz INTERNATIONAL NEWS some way to explaining Germany’s current economic might. have long provided the backbone of the economy. Just as important are the relati vely low levels of private debt. Lessons learned While the rest of Europe gorged on cheap credit throughout the 1990s and 2000s, German companies and individuals refused to There is clearly much to learn from the German model, but blind spend beyond their means. One reason for this, says David Kohl, replicati on may not be the answer. deputy chief economist at Frankfurt-based Julius Baer bank, is that Many economies jealously covet Germany’s manufacturing real interest rates in Germany remained stable, unlike those in prowess, parti cularly while demand for its industrial products in other European economies. “In the UK, Italy, Spain and Portugal, emerging markets such as China conti nues to boom. for example, higher infl ati on meant real rates moved down, so there was a huge incenti ve to borrow money,” he says. But cultural UNDERNEATH THE HEADLINES diff erences are just as signifi cant. Germans are uncomfortable ON OCTOBER 15th Citi group announced its third-quarter earnings. with the concept of borrowing money and prefer to live within At fi rst glance the fi gures looked pleasing. Net income rose their own means. “In German, borrowing is ‘schulden’, [the same between July and September this year to $3.2 billion, up from word for] guilt. There is an atti tude that if you have to borrow, $468m last year. But break down Citi ’s earnings and the picture was there is something wrong with you,” says Mr Kohl. worse. Stripping Labour reforms out credit valuati on adjustments, Another reason behind Germany’s current economic pre- adjusted earnings eminence in Europe is the relati vely low number of hours spent at per share in fact work and in the classroom. Germany fell from $1.06 last embarked upon a programme of Hours spent at school, year to $1.02 this fundamental labour market reform aged 7-14 year. And it seems in 2003, sparked by the excesses of Country Hours that the drop in post-unifi cati on wage increases. Italy 8316 Australia 7806 profi tability of Strong employment protecti on Netherlands 7700 19% at Citi ’s core legislati on and a degree of trust France 7432 operati ons has been masked by an improvement in its portf olio on behalf of the workforce in well- Spain 7364 of non-core assets. Consumer-banking profi t fell 23% because of capitalised companies that had not England 7258 increases in long-term interest rates since April. over-borrowed, meant the Social Germany 6362 Profi t also decreased, by 15%, in its investment banking and Democrati c government was able to Japan 6344 securiti es division, caused primarily by a fall in investment-banking use its close ti es with labour unions Greece 6340 fees and bond-trading revenues. Most of the growth in revenues to push for moderati on in wage Poland 4715 and profi ts came from Citi Holdings, a pool of non-core assets infl ati on. OECD average 6732 currently being run down or sold off . Losses in this part of the bank The reforms laid the foundati on for Source: OECD. SELECTION OF fell to just $98m. a stable and fl exible labour market. COUNTRIES. Citi ’s chief executi ve, Michael Corbat, claimed that the bank has While unemployment across Europe been through a tough macroeconomic environment, accounti ng and the US soared during the global downturn, remarkably the for the disappointi ng picture. But the bad results come a year jobless number in Germany barely fl ickered. German workers aft er Vikram Pandit resigned (or was ousted, many say) as chief were simply willing to work fewer hours, knowing that they would executi ve in reacti on to shareholder dissati sfacti on with the bank’s keep their jobs because of it. They were all the more willing to low profi tability. Mr Corbat’s appointment, markets hoped, would do so due to the stronger bond that exists between workers and accelerate cost cutti ng, smooth relati ons with regulators and employers compared with many other countries. No wonder, boost profi tability. Under Mr Pandit, Citi ’s share price had fallen then, that Germans work fewer hours than most. 89% and it was hoped his successor would accelerate the return Job skills to bett er ti mes. More important sti ll to Germany’s industrial strength is the Markets have been persuaded by this change. Citi ’s share price country’s educati on system. has risen more than 30% since Mr Corbat took the reins (it has Most producti ve School fi nishes at lunchti me across easily rebounded from a small dip aft er Citi ’s earnings release). economies in OECD much of Germany due to so called But its quarterly report has left some analysts wondering whether last year’s sudden change in management has done any good. GDP/hr “societal preference”, designed to Country worked allow children to spend more ti me Although Mr Corbat sped up plans to cut jobs, announcing last Norway 81.5 with their families. But it’s in the later December that 11,000 jobs would go, the blueprint for this had Luxembourg 78.9 years of schooling that the German already been laid out by his predecessor. lrish Republic 66.4 model really stands apart. Half of Mr Corbat has also inherited a gilded legacy in other ways. Mr US 60.4 all youngsters in upper secondary Pandit’s enthusiasm for writi ng down bad loans depressed headline Netherlands 59.8 school are in vocati onal training, and profi ts, but it made the bank slimmer and bett er positi oned for Belgium 59.2 half of these are in apprenti ceships. the future. Now, declared write-downs (net credit losses) have France 57.7 Apprenti ces aged 15 to 16 spend fallen by 38% compared to the third quarter of last year, possibly Germany 55.3 indicati ng that long-term structural reform may be being sacrifi ced Denmark 53.2 more ti me in the workplace receiving on-the-job training than they do in in favour of raising short-term headline profi ts. Just like its recent Switzerland 51.7 earnings, last year’s management changes may also go down in Source: OECD. FIGURES IN S. school, and aft er three to four years are almost guaranteed a full-ti me history as not as good as they fi rst seemed. job. And in Germany, there is less THE FALLOUT FROM FALCIANI sti gma att ached to vocati onal training and technical colleges than in many countries. A 41-YEAR-OLD nati ve of Monaco increasingly looks to be to banking what Edward Snowden is to American surveillance. In 2008 The German educati on system, therefore, provides a conveyor Hervé Falciani walked out of the Geneva branch of HSBC where belt of highly skilled workers to meet the specifi c needs of the he’d worked for three years, clutching fi ve CD-Roms containing country’s long-established and powerful manufacturing base, data on tens of thousands of account holders. The theft has lobbed which is rooted in the stable, small-scale family businesses that a bomb into Europe’s private-banking market, spawning raids and

MTBiz 21 INTERNATIONAL NEWS

tax-evasion investi gati ons across the conti nent. In the latest, 90 Hong Kong has imported the Federal Reserve’s easy monetary Belgian agents swooped on the homes of two dozen HSBC clients policy despite its healthier economy. The result has been high this week, including infl ati on and surging home prices. Even as its economy has several diamond diverged from America’s, it has converged with that of the rest of dealers in Antwerp. China. Yet the Hong Kong dollar and the yuan have been growing Mr Falciani went on apart. The Hong Kong dollar’s peg was once also a ti ght link to the run when the the yuan, which was itself pegged to America’s currency. But since Swiss charged him China modifi ed the peg, the yuan has appreciated by over a third. with data theft . Aft er moving to Spain he was As Mr Fischer suggested, some economists now wish that Hong jailed, but freed aft er Kong had another system. It could, for example, let its exchange a judge denied a Swiss rate crawl upwards to curb infl ati on, as Singapore does. Or it could extraditi on request. At one point, he claims, he was kidnapped by track the rising yuan. Eventually it could even adopt the mainland’s Mossad agents who wanted a peek at the client names. He has currency; over 10% of bank deposits in Hong Kong are already in now taken refuge in France, where the government has off ered yuan. him protecti on in return for assisti ng in its hunt for tax dodgers. But these alternati ves have drawbacks of their own. China may Several countries have used the data to bring cases against now dominate Hong Kong’s trade, but much of that trade is sti ll suspected evaders. Revelati ons that dozens of Greek public fi gures priced in dollars, points out Li-Gang Liu of ANZ, a bank. Besides, hid money off shore have shaken that country’s politi cs. Spain and the yuan’s value is sti ll fi xed each morning by China’s central France have fi ngered hundreds of high-level cheats and retrieved bank, and yuan assets are fenced in by capital controls. Pegging €350m in back taxes. Mr Falciani has claimed that the CDs provided to an inconverti ble yuan could destroy Hong Kong’s role as an crucial support for an American probe into the failure of money- internati onal fi nancial centre, Mr Liu argues. laundering controls at HSBC, which led to a $1.9 billion sett lement. Over ti me Hong Kong has adapted to some of the peg’s constraints. Mr Falciani has said he sti ll fears for his safety, despite round-the- Its exchange rate may be rigid, but its other prices and wages are clock protecti on from three armed guards provided by the French. remarkably fl exible. During the fi nancial crisis, even senior civil At least he is not short of work. He is acti ng as a consultant to France’s tax authoriti es on developing long-term anti -tax evasion servants took a pay cut. This fl exibility allows the economy to measures. And he recently became an adviser to a new Spanish adjust quickly to cyclical ups and downs without the help of an politi cal party, Parti do X (which, ironically, prizes its members’ independent monetary policy. anonymity). Prices, parti cularly for property, do someti mes take on a life of He insists his moti ves have always been pure: to repel Switzerland’s their own. But a more fl exible exchange rate is not enough by “att ack” on other countries’ tax laws and exchequers. HSBC says itself to prevent asset-price booms: Singapore’s house prices he is no whistleblower. He tried to sell the data at fi rst, the bank have also soared despite its strengthening currency. And in some contends, and only started to work with prosecutors when he was cases the currency itself can be the asset that takes off . The Swiss jailed in Spain. It says he took informati on on only 15,000 clients franc, for example, strengthened dramati cally during the euro (Mr Falciani claims it was many ti mes that number) and that a crisis, prompti ng its central bank to intervene. As nearby countries porti on the bank has seen contains errors. like India and Indonesia fret about capital outf lows and plunging Regardless, many more tax-shy Europeans have reason to sleep currencies, the stability off ered by Hong Kong’s peg looks as good fi tf ully. Other countries are said to want a look at the pilfered on its 30th birthday as it ever has. data, much of which is apparently yet to be decrypted. When Mr SWISS BANKS AND TAX EVASION: ARRESTING DEVELOPMENTS Falciani fi rst made the rounds with his discs, governments showed litt le interest. The fi scal strains produced by the euro crisis have THE long arm of American justi ce conti nues to bludgeon Swiss changed all that. fi nanciers who stand accused of aiding tax evasion. The fi rst is BUY NOW AT 1983 PRICES : AFTER 30 YEARS, HONG KONG’S PEG to indict and catch individual bankers and lawyers who enabled TO THE AMERICAN DOLLAR IS STILL GOING STRONG tax evasion. Mr Paltzer confessed to having opened Swiss bank accounts in the names of corporate vehicles he formed for The skyline has Americans, knowing they aimed to evade taxes. changed but the exchange rate A dozen other banks, including Credit Suisse, Julius Bär and the hasn’t. “WHATEVER Swiss arms of several foreign banks, remain under investi gati on. exchange-rate system Most of the other 280 or so Swiss banks have an opportunity a country has, it will to wipe the slate clean under a recently announced Swiss- wish at some ti mes American accord, if they pay penalti es of up to 50% of the rogue that it had another client’s account balance. Wegelin, Switzerland’s oldest private one,” according bank, closed its doors aft er the fi rm itself was indicted. Another to Stanley Fischer, venerable wealth manager, Bank Frey, recently said it too would a former central cease operati ons—a move prompted in part by unwelcome banker. Many countries fi nd it hard to cope with a fl oati ng currency prosecutorial interest. and even harder to sti ck to a fi xed one. It is therefore remarkable that Hong Kong this week celebrated the 30th anniversary of its Under the accord, banks will have to turn over reams of currency’s peg to the dollar. informati on, including on employees who worked with American This crude but eff ecti ve system was adopted on October 17th 1983 clients, on external advisers and on banks to which undeclared to stop a currency crisis. Since then it has survived three American assets were transferred. The Swiss are sti ll opposed to automati c recessions, SARS (Severe Acute Respiratory Syndrome) and Soros exchange. (ie, George), a fabled currency speculator, who att acked the peg Weeks earlier, ministers had reiterated their view that Swiss during the Asian fi nancial crisis. criminal law should not be used to help foreign countries recover In recent years Hong Kong’s peg has come under upward, not lost taxes or enforce any other economic laws. downward pressure. In maintaining its fi xed rate to the dollar,

22 MTBiz ENERGY OUTLOOK BANGLADESH’S PERSPECTIVE

The Energy Outlook for Asia and the Pacifi c aims to support ADB the government expects especially from the private sector’s energy sector operati onsby providing stakeholders with an energy parti cipati on in the formof a public–private partnership and outlook for the region up to the year 2035.It att empts to identi fy pure private investment, given fi nancing diffi culti es bythe public policy, social, infrastructure, and technology issues that must sector. Electricity tariff s that are arti fi cially lower than supply costs beaddressed to meet future energy need of ADB members in Asia have kept theenergy industry indefi cit and discouraged private and the Pacifi c. companies’ involvement. In fact, Bangladeshis required to launch a fuel price reform as a part of its loan commitment with the Bangladesh has demonstrated robust economic growth, Internati onalMonetary Fund so that the fund is not used for fuel maintaining a gross domesti cproduct (GDP)growth rate of above subsidies. 6% since 2004 except in 2009 when it was 5.7%. Alongwith industrializati on, the industry sector’s contributi on to GDP has Bangladesh’s GDP is projected to almost triple from $83.0 billion expanded, driven mainlyby manufacturing of products such as (constant 2000 $) in 2010 to$243.0 billion in 2035 at an annual garments and texti les. Economic performance couldhave been growth rate of 4.4% (Figure 11.1.1). Populati on growth willbe bett er, however, if energy had beenadequately supplied.Chronic moderate at 0.9% over the outlook period, reaching 187.1 million power shortages and frequent blackouts have caused substanti al in 2035 from 148.7 millionin 2010. Accordingly, GDP per capita economic losses.The unreliable power supply is parti ally a result of will increase from $558 in 2010 to $1,299 in 2035.Final energy insuffi cient gas supply. Bangladesh isheavily dependent on natural demand in the BAU case is projected to increase from 22.9 gas in power generati on, whereas the existi ng gas reserveswill Mtoe in 2010 to50.3 Mtoe in 2035 at an annual growth rate of not providesuffi cient supply to sustain economic acti vity beyond 3.2%. By sector, although the other sectors(which includes the 2016 if the current gasconsumpti on level isunchanged (Ministry residenti al, commercial, and agriculture sectors) will remain of Finance 2011). Hence, the government is seekingto diversify dominantt hrough 2035, the share will decline from 61.3% in 2010 energy sources for power generati on. For instance, a target of to 45.6% in 2035. In contrast, theindustry and transport sectors 500 megawatt s (MW)of power from renewable energy by 2015 will gradually increase their shares from 17.8% to 29.1% andfrom has been set with emphasis on solar photovoltaic,wind, and 13.0% to 19.3%, respecti vely, over the outlook period.The industry biogas. In additi on to domesti c coal development, coal-fi red sector’s energy demand will register the fastest annual growth power generati onusing imported coal is also expected to expand. rate at 5.2%,increasing from 4.1 Mtoe in 2010 to 14.6 Mtoe in Import of liquefi ed natural gas (LNG), whichis expected to start 2035. Natural gas will account for the largestshare at 61.4% in in 2015, will also help energy sourcediversifi cati on.29 In the long 2035. Producti on of ferti lizers needed in agriculture, the country’s term, anuclear power plant is planned to begin operati on in 2018. majorindustry, will conti nue to boost natural gas demand.The Power shortage is aff ected by poor infrastructure development energy demand of the transport sector will also grow robustly and maintenance intransmission and distributi on as well as lack at 4.8% per year between 2010and 2035. Oil will maintain its of generati on capacity. Taking this matt er seriously,the Bangladesh dominant share in transport energy demand at approximately70% government envisions ensuring a reliable and quality supply of through 2035. Meanwhile, natural gas will account for the rest electricityand aims to add 20,000 MW of generati on capacity by with a robust growth rate of 5.2%, since compressed natural gas 2020 (Board of Investment n.d.).Infrastructure development to vehicles are assumed to be used conti nuously for energysecurity enhance energy supply necessitates substanti al investment,which and air quality improvement. Figure 11.1.1 Populati on and GDP (left ) and Final Energy Demand (right): Business-as-Usual

GDP= gross domesƟ c product, Mtoe=million tons of all equtvalent. Figure 11.1.2 Primary Energy Demand (left ) and Incremental Growth by Energy and Sector (right): Business-as-Usual

Mote= million tons of oil equivalent, NRE= new and renewable energy. Note: NRE Includes noncommercial biomass isuch as wood and animal waste) and other new and renewable energy sources isuch as biomass, geothermal, wind, solar, and others).

MTBiz 23 BANKING INDUSTRY BRANCH EXPANSION

Shahjalal Islami Bank IFIC Bank Midland Bank Islami Bank Bandura, Nawbabgonj Meghola Bazar, Dohar Bhawal, Gazipur Anwara, Chitt agong and 87th Branch 110th Branch New Branch Pekua, Cox’s Bazar 285th and 284th branches

Bank Asia Union Bank Rupali Bank Shahjalal Islami Bank Sonargaon-Janapath Road, Poti ya , Chitt agong Kalarai Bazar , Sylhet Chapainababganj Utt ara New Branch 524th branch 85th Branch 80th branch

Nati onal Bank Limited (NBL) NCC Bank Islami Bank Bangladesh Meghna Bank Gopalganj Darus Salam Road, Mirpur Limited Moti jheel 170th branch 99th branch Fatulla , Narayanganj New Branch 281th branch

EXIM Bank Al-Arafah Bank United Commercial Bank Agrani Bank Satarkul Munshiganj Limited (UCBL) Laldighirpar Corporate Branch of 75th branch 109th branch Kaligonj , Gazipur Sylhet to Rangmahal Tower 134th branch Branch relocati on

Trust Bank NCC Bank Meghna Bank IFIC Bank Sylhet Rawozan , Chitt agong Mithapukur, Rangpur Bagerhat New Branch 98th branch 2nd branch 109th Branch

24 MTBiz